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Keep in mind that every year older one gets, the statistical probability that death will occur during the year increases. Thus, the cost of pure insurance payable in the event of death must increase every year. 2. Level death benefit with an increasing premium. 3. Level premium with a level death benefit.
Fortunately for the life insurance companies, the last of these three is the easiest to grasp, the easiest to budget for, the easiest (until recently) to sell, and (thanks to low interest cash values) the most profitable for the company. Unfortunately for the consumer, it has been by far the costliest of the three ways to buy life insurance. Because the true cost is hidden and certainly not disclosed by the companies, the consumer, if not actually told by the salesman, is led to believe that the most costly is the most economical of the three methods of providing the life insurance protection he is seeking for his family.
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