Question: What is your initial (or underlying) opinion of life (and health) insurance?
Note from professor:Life insurance, like all other insurance, is the ability to combine a homogeneous group of people to spread the risk. Different insurance companies want to insure different groups of people, for example Progressive Insurance Company insures high-risk drivers for auto insurance, Penn Treaty Network America insures high-risk individuals with medical ailments for long-term care insurance, Foremost Insurance Company insures mobile homes, and Prudential provides group life insurance (sold to employers).
Each company has their own unique rating factors and underwriting, and employs thousands of workers nationwide (and worldwide). Also, they collect millions of dollars in premium, which they turn around and purchase stocks and bonds on the global equities market, which in turn increases our own retirement portfolios.
Trust me, if a company didn’t invest their premiums to earn a higher rate, they would go out of business (especially home insurers).One thing to check is whether you receive life insurance coverage as one of your employee benefits.
One of the great benefits of group life insurance is that you’re not required to provide proof of insurability, which means regardless of any existing conditions, you may qualify to receive life insurance. On the contrary, if you try purchasing individual life insurance, a preexisting condition will likely disqualify you from receiving coverage.
If you do choose to cover all your life insurance needs through a group policy, keep in mind that your coverage could be lost should you lose your job or choose to leave your employer.
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