I recently attended a full day investment workshop where the speakers fervently believed that everyone seated in audience could become a millionaire investing just 10 dollars a day over a period of time.
It wasn’t the most polished ‘performance’ I had ever witnessed, but with such events, it was obvious that the goal of the speaker was to encourage as many people to sign up for a more highly priced workshop at a later date.
This is fair in my book provided the speakers provided immense value to the audience of the original workshop.
And to their credit, they definitely achieved this to a certain extent, as people started walking up to the speakers during breaks to seek advice and further clarification.
I too profited from a few timely reminders.
As the workshop progressed, they gave example after example on why you should invest now, and how their advance workshop can be the vehicle which will take you to your dreams, appealing to both the audiences’ motivations of fear and greed.
Just when I was getting a little uneasy because a large part of the pitch started to deviate from proper financial planning, a new speaker went up on stage to talk about the importance of insurance.
“Okay, interesting.” I thought.
The guy spoke about the importance of insurance without pin-pointing how an insurance portfolio relates to an individual’s financial picture.
Nonetheless, it can be argued that it was useful information for those who have little to no knowledge about insurance.
Observing that he was losing the audience, the speaker quickly launched into his main topic, that is, long story short, to entrust our insurance portfolio to him and his team.
They would then “modify” our portfolios, removing “unnecessary” policies to save on insurance premium, and thus creating additional dollars for us to invest!
In other words, he was indirectly bringing up the age-old debate of buying term and investing the rest.
By helping you to terminate your current cash value policies; you can then purchase a term policy and invest the savings (hopefully after attending the advance investment workshop).
Don’t get me wrong. I see buying term and investing the rest as a legitimate strategy.
And I don’t doubt that those who are FULLY aware of the limitations of such a “modification” may benefit from this.
However, the angle which he was coming from doesn’t necessarily work with every individual.
Putting aside the risks involved for many of those seated who are less savvy with insurance, it is important to note that some policies issued in the old days are different from those issued today.
Thus, making “modification” a little more complex than it seems.
For example, the changes in the definitions of dread/critical illnesses earlier this year could mean that you are actually holding onto a very valuable asset in your insurance portfolio without even realizing it.
Moral of the story: Saving Premiums should NEVER be the only objective in selecting an insurance policy!
Do not be too eager to terminate the policies that have been in force due to the promise of saving on your premium. What you gain may not be able to offset the losses (得不偿失)
By the way, has anyone out there heard a similar talk? I would love your feedback.