met up with my financial planner yesterday (wei chang, yes the one from 16/02..) to go through the proposals that he came up with after the annual review of the policies.. dawned on me that insurance policies are quite essentially like a wager (albeit one which has quite unusual terms, particularly if you're looking at a life policy).. the following might not be something new, but nevertheless looks kind of ridiculous on first sight..

so i was thinking.. if a life policy is a wager, then what's the bet on? quite simply.. that would have to be the policy holder's life.. and the parties to this wager would be the insurance company/financial institution and the policy holder..

so who's betting on what? looking from the viewpoint of the insurance compnay, they would be betting that the policy holder won't die before the end of the life policy.. what then would be their bounty if they are correct? this would have to be the annual premiums that the policy holder pays..

so then someone must be betting otherwise ie. the policy holder would die before the end of the life policy.. and who can this be but the policy holder?! sounds kind of crazy if you ask me.. the policy holder betting against his own life.. and what would be the bounty if he indeed die before the end of the life policy? this would have to be the sum insured.. another interesting thing about this wager is that the policy holder don't actually win the wager.. because even if he is correct in saying that he would kick the bucket before the policy ends, he won't be one who would get to enjoy the spills! the bounty, or the sum insured, is divided equally between the policy holder's parents (if he is not married), solely his spouse (if he is married), half to his spouse and the remaining divided equally among his childen (if he is married with kids)..