Here is a real case of a person who bought a rip-off insurance policy.
A bank sold the idea of providing the customer’s kid with a monthly income should the parent dies or has TPD. Actually this is what we called a Monthly Income Benefit. Here was what the person bought:
Premium: $34.75 per month
Coverage term: 20 years
No cash value.
Monthly benefit:
$1000 per month during the last 36 months of coverage ; $500 per month 24 months; $300 per month for 180 months. Therefore the accumulated sum assured is $102,000 but decreasing in manner.
On the other hand a cheapo term insurance that I found pays a lump sum (level, not decreasing) of $102,000 for the person who is now 1 year older cost $31.90 per month.
As it can be seen, this person bought an extremely expensive plan because the plan bought has protection decreasing in fashion but with a cheaper premium one can get a protection that is level. In other words, there was mis-selling.
It appears to me that market is entirely insufficient.
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