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gwern comments on Open thread, August 19-25, 2013 - Less Wrong Discussion

2 Post author: David_Gerard 19 August 2013 06:58AM

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Comment author: gwern 23 August 2013 07:56:42PM 5 points [-]

(There's another issue I thought of: Like most life insurance policies, the ones I bought are good only for 20 years. There is a pretty good chance that I will live for those 20 years but in the meantime develop a serious health condition which makes it almost impossible to buy more insurance. What then?)

That's a feature, not a bug, of term life insurance. That's the tradeoff you're making to get coverage now at a cheap rate. But of course, the option value exists on both sides - so if you want to lock in relatively lower rates, well, that's why whole life insurance exists.

Comment author: brazil84 23 August 2013 10:05:06PM 1 point [-]

That's a feature, not a bug, of term life insurance. That's the tradeoff you're making to get coverage now at a cheap rate. But of course, the option value exists on both sides - so if you want to lock in relatively lower rates, well, that's why whole life insurance exists.

Yes, good point. I actually looked into getting whole life insurance but the policies contained so many bells, whistles, and other confusions that I put it all on hold until I had bought some term insurance. Maybe I will look into that again.

Of course if I were disciplined, it would probably make sense to just "buy term and invest the difference" for the next 30 years.

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