Risk of Living too Long - Insurance Products - Principles of Insurance, B com B Com Notes | EduRev

Principles of Insurance

B Com : Risk of Living too Long - Insurance Products - Principles of Insurance, B com B Com Notes | EduRev

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What  is Whole Life Insurance? The story of the man who lived too long


Whole life insurance plans are insurance plans that offer insurance coverage up to the age of 100. This type of insurance plan when the insured reaches the age of 100. There are 3 ways of paying this. The first way is paying the premiums of the whole life insurance policy up to the age of 100. The second way is when there is a specific period of time to pay the whole life insurance policy. An example would be paying the whole life insurance policy for 20 years but the coverage is still up to the insured reaching age 100. The third way is through specifying up to what age the insured pays the whole life insurance plan. For example, payments are made until the insured reaches the age of 65 but the coverage will still be up to age 100.


The question is when do I need a whole life insurance? Let us look at the story to find out.


Mr. Long Life is a businessman. He owns a store that sells different office supplies and equipments. The business is doing so well that Mr. Long Life’s wife does not need to work anymore and just focus on their four lovely kids. Mr. Long Life is just 48 years old and despite his schedule in his business, he manages to keep himself healthy with his thrice a week workouts. He has 4 kids, a house of their own, 2 cars and a business that was providing for all of their needs. The eldest was 8 years old. Although he started his own family in his 40s, his healthy lifestyle convinced him that he will live to see his future grandchildren.

One day, Mr. Whole Life Insurance, a financial advisor and a friend of Mr. Long Life, met with Mr. Long Life over a cup of coffee.

Risk of Living too Long - Insurance Products - Principles of Insurance, B com B Com Notes | EduRev

 

They were talking about their lives and reminiscing about their years when they were high school buddies. Mr. Whole Life Insurance, upon hearing  of his buddy’s life and assessing Mr. Long Life’s needs, presented to him a Whole Life Insurance plan that would give his family protection until the age of 100. “You know buddy”, Mr. Whole Life Insurance said, “You are not that young anymore. Your kids are still so young. It is still a long way for them before they finish college and establish themselves in their career. Your wife is not working so you are the sole bread winner. I really think you should consider this Whole Life Insurance plan because it will serve as a protection for your family in the later years.” Mr. Long Life with confidence replied, “Thanks buddy, but I have to pass on this one. I just feel that I dont need it. My business is doing really well. It provides us with what we need and will do so for the later years. Eventually, I will let my kids run this business or if ever they choose a different career path, I will have savings that will take care of the education they need for that. Besides, I dont have any vices. I feel so young and healthy and I could run this business for a very long time. By that time, I will have enough savings for our future needs until I retire. I will be around for a long time so there is really nothing to worry about.”

 

Mr. Whole Life Insurance, trying to explain his point, said, “I understand my friend. But try to think about this. As you get old, the risk becomes higher. No one in your family can take over the business in the near future. Sometimes, LIVING TOO LONG becomes a problem and a burden to your family if ever health issues appear. These are things that we have to be ready for.” But Mr. Long Life still resisted. “Ok then.”, Mr. Whole Life Insurance said, “You know my number just in case you change your mind. This is really for your loved ones so you can just call me if you have a change of heart.” And so they shared a few more stories before they parted ways.


25 years later, Mr. Long Life was already 73 years old but was still running the business. He has one kid who was still in college while the rest were already working. The eldest was working abroad and her career was beginning to progress. The two were just starting off their careers. None of them ever tried managing the business since their interests were to pursue their own careers. Then the unexpected happened. Mr. Long Life, who was still strong for his age, collapsed in his office. He was rushed to the hospital and was brought to the ICU.

Risk of Living too Long - Insurance Products - Principles of Insurance, B com B Com Notes | EduRev

He suffered a stroke. The wife and kids rushed to visit and was shocked. “How could this happen to him?”, his wife asked to the doctor. “Just awhile ago, he was okay.” The doctor explained the findings to the family and said that it is unavoidable for these things to happen once we age even if we seem to think we are healthy.


3 months have passed and Mr. Long Life was still confined in the ICU. He was on a respirator now as more complications arised due to his inactivity. He was in a coma. The wife stayed with him and was relieved at night by their three kids so she could rest. The business was losing money since nobody really knew how to run it except Mr. Long Life. The hospital bill was racking up and eventually, the wife decided to sell it at a low price. They needed the cash. The eldest could not stay with her father since she was abroad and could not leave her job because she was paid well. She was the one giving the financial needs of her parents. Although the three were working, they had their own family and their income was only enough for them. They still gave whatever they could share just to continue paying the hospital bill.


After a month, the eldest could not bear not seeing her father and so decided to leave her job abroad and just try to find another job just so that she could see her father. Although the job was not providing her what she used to earn, she felt she had a responsibility to her parents especially being the eldest. After 5 months, Mr. Long Life eventually passed away.

Risk of Living too Long - Insurance Products - Principles of Insurance, B com B Com Notes | EduRev

Although the family was not able to recover from the financial loss, eventually they recovered emotionally. The eldest said to them, “This is an experience that we should all learn from. Life is unpredictable and so we must do whatever we can to protect our loved ones.” And the mother, with tears flowing agreed and told her children, “You all have your own family now so you have an obligation to them. Do not worry about me. All I want is to see my grandchildren every weekend. My happiness is to see all of you happy and living comfortably.”


As much as we hate talking about these kinds of things, these are realities that may happen to anyone. It is inevitable and so we must know what can help us so that we can protect ourselves from these situations. As we have learned from Mr. Whole Life Insurance, 

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