X-Message-Number: 33061
From: "John de Rivaz" <>
References: <>
Subject: Re: "in good shape" 
Date: Sun, 21 Nov 2010 10:28:31 -0000


I am writing in support of Charles' article about inflation and life insurance 
policies. The only way to work out a correct sum to insure is to take a view on 
inflation, your age at the time of taking out the policy and calculating the sum
needed if you were to perish at the end of your expectation of life.


This would make the premiums onerous at the start, but remember that as 
inflation proceeds they will seem less so as the years pass.


For a young person premiums for even a large sum assured are quite small in 
proportion. The difficulty though is in estimating expectation of life. With the
advance of technology pointing one way and the burden of regulation etc the 
other it is hard to say what age people now aged in their 20s will reach.


I recall how fixed payout life insurance sold at the beginning of the 20th 
century to pay for funerals proved so inadequate when the policy holder started 
dying some 50 years later. Yet at the beginning of their policies policyholders 
were paying out a noticeable part of their disposable income.


The problem is that the cost of services rise far faster than the cost of 
manufactured goods, yet inflation indices usually include both. I am not sure 
whether there is a service costs only inflation index, but if there is one, it 
should be used in the above calculation.

-- 
Sincerely, John de Rivaz:  http://John.deRivaz.com for websites including
Cryonics Europe, Longevity Report, The Venturists, Porthtowan, Alec Harley
Reeves - inventor, Arthur Bowker - potter, de Rivaz genealogy,  Nomad .. and
more

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