Life insurance was invented in 1583. The first plan was a Yearly Renewable Term Plan. These plans ruled the life insurance roost for 180 years (In those days that was like five generations). After that time that plan FAILED and the industry was all but bankrupt. It was then that they developed a more sustainable plan - Whole Life.
In 1762 Whole Life came into being. This plan helped to finance the Industrial Revolution. It made Great Britain into a super power. Then it made The US a super power. After that it made Japan a Financial Super Power. And it financed the growth of the Asian tigers. Because of Whole Life insurance South Korea was transformed from a war ravaged country in 1953 to the power that it is today. This phenomenon is yet to be recognized by the world. My book LIFE INSURANCE - The Cause Of Economic Prosperity outlines in detail how this occurred.
The positive impact of Whole Life insurance on global prosperity is being threatened by the asinine desire of Americans to buy CHEAP life insurance. Quacks who know not what they are talking about is whipping Americans into a frenzy. As a result of this advice, Americans are on their merry way back to the 16th. century plan that FAILED - Term Life Insurance.
If this stupid thinking was contained in America it would be bad but not so bad. This practice of buying Term Life Insurance would cause America to fall sooner rather that later. Since no world power has stayed on top forever, falling sooner rather than later would be neither here nor there. The problem is that America's thinking emanates to the rest of the world and very soon everyone will be doing what America is doing. If this were to happen, this would cause a severe and PERMANENT CONTRACTION of the global economy.
The dumping on the world of the toxic assets concocted by Wall Street would pale in comparison to what would happened if this nonsense about buying Term takes further hold. The world knows that it was mortgage backed securities and credit default swaps which caused the current financial crisis. When you know what causes a problem you can know how to fix it. This current problem will be fixed and in another two or there years we will be back to where we were.
The problem with the buying of Term insurance is that the world would not even know that it is causing harm. In blissful ignorance we would submit to a less prosperous life indefinitely! The world is yet to know that it was Whole Life Insurance that has caused the world to move in leaps and bounds toward prosperity. When I see the eminent Dr. Alan Greenspan not being able to make the connection between the world's prosperity and the purchase of Whole Life insurance, I realize that probably nobody would.
Dr. Alan Greenspan in his book The Age Of Turbulence, in trying to heap praise on Adam Smith's four principles for wealth - abundance of capital, free markets, limited government and the rule of law allowing for property rights; compared the economy of Argentina with that of Germany and the U.S. He observed that Argentina's real per capita GDP at the start of the 20th. century was greater than that of Germany and almost three-fourths that of the US. But by the end of the 20th century Argentina's economy was about a half of Germany's economy and less than a half of the US. He argues that this was caused by Argentina's populist politics and less than consistent rule of law.
I beg to differ. Argentina was left behind by Germany and the US because these countries bought substantial amounts of Life Insurance, specifically whole life insurance, and Argentina did not! And as I point out in my book countries that do not buy life insurance get left behind. To prove that it was not populism that was Argentina's down fall, how do you explain the success of China? China is Communist! It has very little free market, limited rule of law allowing for property rights and plenty government! China is prosperous because it has an abundance of capital. This capital comes from the savings of Chinese and foreign investors wanting to capitalize on Chinese opportunities.
The over arching cause of prosperity is the abundance of capital. Capital is accumulated through savings. The natural tendency of mankind is not to save. That is why the advent of life insurance which allowed for the building of reserve has played such a valuable role in the development of the world's economy. Term Life insurance does not allow for any significant savings. It is as sure as night follow day that if this idiotic love for Term continues, savings will decline and there will be no capital available to finance America's prosperity.
There are more startling revelations in my book. Get your copy from Xlibris at www.xlibris.com
This article focused on the danger of Term Life to a country's economy. My next article will address the danger to individuals. That impact is even worst than it is to countries.
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I was about to buy a term insurance policy as I find it cheaper over the whole life insurance policy. But after knowing all about the dangers of this policy I need to rethink and have to decide again. Thanks for this valuable information.
ReplyDeleteTerm Life Insurance is NOT cheaper! That's the trick. The INITIAL cost is less than a permanent plan. Over the long run TERM cost MORE and does LESS for you, your family and your country. That plan should be OUTLAWED. It has done and will do A LOT of HARM including LEADING THE DOWNFALL of AMERICA!
ReplyDeleteTerm is just like the ADJUSTABLE RATE MORTGAGES which blew up America's finances and that of the world. With ARM the interest rates starts out low for about 6 months. Then it increases and keep on increasing to the point where a lot of people who could afford the mortgage when it was low cant afford it after it has ADJUSTED. TERM start out low and then the premiums ADJUST and they will adjust to the point where it becomes difficult to afford.
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