Chapter 8. HOW TO SHOP FOR THE BEST LIFE INSURANCE

When you buy a policy to protect yourself against a fire, it's called fire insurance. When it's for an accident, it's accident insurance. So when you want to protect your family from the consequences of your death, it should be called "death insurance," right?

Perhaps. But long ago, insurance salespeople discovered that no one wanted to talk about their death—let alone buy insurance for it. So taking a chapter out of George Orwell's 1984, they called it "life insurance" instead.

It didn't seem to help much, though. Life insurance was still a very hard sell, and agents who pushed it too hard got a bad reputation for bringing up unpleasant subjects. "Want a row of seats all to yourself on your next flight to Chicago?" went a popular joke. "Then just tell your fellow passengers that you sell life insurance."

Prudential, the Rock-of-Gibraltar largest insurance company in the world, came up with another very "creative" solution. They figured out a way to disguise the life insurance as an annuity, developed a big sales force trained to obfuscate the real nature of the product, and sold it to millions of investors from 1982 through 1995. (Nearly all annuity policies sold by insurance companies do have a life insurance component. But that's a far cry from being an actual life insurance policy.)

It took many years of litigation before the regulators caught up with them. After much heated debate and negotiation, the company belatedly agreed to ...

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