Ignore Anyone Who Tells You Insurance Is An Investment

Ignore Anyone Who Tells You Insurance Is An Investment

MichaelBankers Anonymous | May 6, 2013, 8:48 AM | 2,886 | 8

Insurance has one purpose, and one purpose only. Remembering that purpose will keep you from expensive insurance ‘solutions.’ The purpose of insurance is risk transfer. For the rest of your life, insurance salespeople will try to sell you the idea that you can both increase your wealth and protect against risk at the same time. Not True. Buying insurance transfers your personal risk to an insurance company – and should be used only that way. Insurance does not increase your wealth and attempts to convince you otherwise end in expensive financial monstrosities.Not a dragon, a chimera

Investment products have giant wings and sharp beaks, while insurance products have protective scales and armored fins.  The combination is not the cool dragon your insurance salesman wants you to envision, but a mythical chimera that will never fly – nor save your wealth.

Examples of monstrous chimeras include variable annuities, as well as life insurance billed as a savings vehicle with ‘accumulated policy value’ in it, which your agent will assure you that you can borrow against.

A straight annuity, an investment product designed by the insurance industry, is also a losing proposition for everyone, except the insurance company, of course.

But my insurance salesman tells me this is a great investment?

Yes, for him.  He gets fat commissions.

It’s not a great investment for you.

So, in sum: Insurance is great for transferring risk away from you and onto a big company, but not great for anything resembling an investment.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: