First and foremost , I am not an insurance expert.
Anyway.. here's my personal two cents.
If you purchased term insurance.. how long is your coverage ? 5
years ? 15 years ? 30 years ?
Suppose the term expires.. will you still get any coverage ?
By then.. will you have enough savings to cover all your
liabilities if you depart ?
It if is renewable.. will you need to pay a higher premiums ?
Due to your age and health conditions ?
If it is not renewable.. that means you will need another policy
at a older age. And it ain;t gonna be cheap.
What happens if you are diagnosed with some illness.. will the
insurance company be willing to extend the coverage ?
Frankly.. I don't really care how the agents are being paid..
they can push certain policies.. ultimately.. it is my needs and
financial ability that will decide which policy I will
purchase.
You can seek advise from the agents... but ALWAYS.. read up on
the prints and understand the terms and what it covers ...
yourself.
And remember.. Insurance is not an Investment. It is an
instrument to ensure your spouse/family be financially taken care
of.. if you depart..(at a cost.. the premiums)
Typically.. young people will go for term.. because it's
probably cheaper than life/annuities. So you decide, base on your
financial ability.
Term is always better than Life or endowment regardless of
age.
How does insurance companies make money?
The insurance company invests the money in the stock market and
earns 9-12% and gives the policy holders 4-5%.
The insurance company makes the difference between the yields it
earns and what it pays to policy holders.
The difference in returns over a span of 20 years, the usual
lock in period for insurance savings plan, is huge.
Insurance
$10,0000 at the yield of 5% compounded yields
about $265000 after 20 years. ( 1.05^20 = 2.65329771)
Stocks
$100000 at the yield of 9% coumpunded yields
$560000,(1.09^20 = 5.60441077)
Stocks as seen, yields twice of insurance. Whiles
stocks are usually more volalitle, a regular savings plan would
even out over a period of 20 years.Basically, that is depriving the
insurance companies of the profits they usually
make.
Hence its always better to buy term insurance and use
rest of the savings to invest in a dollar averaging plan for stocks
than to buy regular insurance savings plan.
I always use this argument to put off pesky agents and
without fail i get them off my back.