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Understanding Miller Hanover Insurance

Rather than complicate things, I’ll include a straightforward description of how and what happens in an insurance policy. In reality, it would be oversimplified or otherwise we will be here all day. This is an illustration. Consider the following scenario: you are 31 years old. A standard 20-year term insurance policy for $200,000 will cost about $20 per month. Now, if you were to buy a $200,000 whole life insurance policy, you would pay $100 per month. As a result, instead of being paid $20 (the true cost), you will be overcharged by $80, which will be deposited into a savings account.Learn more by visiting Miller Hanover Insurance

Of course, this is oversimplifying things because many people would cancel the policy (reducing the amount of death expenses paid), and some of those premiums will be used to earn interest, so you can get a general understanding of how things work.

Let’s take a look at whole life insurance, on the other hand. Assume a thousand 31-year-olds (all in good health) purchased the aforementioned entire life insurance policy ($200,000 at $100 per month). These people pay $100 a month. That works out to $1200 per year. If the average person lives to be 75 years old (in good health), the average person would pay 44 years’ worth of premiums. Take that figure and multiply it by $1200 to get $52,800. As a result, each individual will pay $52,800 over the policy’s lifetime. Since a thousand people purchased the policy, the company would receive $52.8 million in premiums. Ladies and gentlemen, how can a corporation afford to shell out two billion dollars when it just expects to make $52.8 million in revenue? This, like the previous case, is an oversimplification since policies expire. In reality, most entire life insurance policies expire because people can’t afford them, as you can see.