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The Wise Investor

5.8 Insurance products
"Now that we have covered the specifics of the
main investments," John began, "there are some
other issues I would like to raise.
Actually, I use the word 'like' very loosely here
Kate," he said with a grimace.
"We should talk a little about insurance. This is a
topic that few of us find interesting, but it is an
essential part of financial success and security so it
deserves some attention.
Consider the policies and products offered by life
insurance companies.
These companies offer two basic services;
insurance and investment.
Some policies have an insurance and an
investment component, and others only have one or
the other.
Pure life insurance is often called 'term'
This is similar to insuring your car or house.
You pay the premium, and you are protected for
a specific period of time. If you die within that
period of time, then your dependants or your estate
is paid a certain amount of money.
The concept is quite simple.
The premiums are dependent on your age, which
in turn is related to the probability that a person of
your age will die within the period of cover.
For a young or middle-aged person, the
premiums are quite reasonable.
This type of insurance is essential for a person
who has dependants, such as young children.
If anyone is financially dependent on you, then
you should have life insurance.