The Structure of the Insurance Market
The structure of the insurance market is one that you need to study thoroughly before you can properly understand finance. Find out about the structure of the insurance market with help from the managing partner at an insurance organization in this free video clip.
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Hi, my name is Mitchell Smith, managing partner of Universal Insurance Services, and Universal Partners. Today, we're gonna discuss the structure of the insurance market. The insurance market can be complicated. There are several insurance products, and you could be talking about property and casualty, health insurance, disability insurance, long-term care or life insurance. And there's other forms out there. Today we'll sort of look, focus on maybe life insurance. And in life insurance you have really a couple of different major products, you have term insurance, which is a temporary period of time of life insurance, and the least expensive. Whole life insurance, really the oldest form of life insurance, but by far the most expensive, and universal life insurance, which is sort of a combination, inexpensive permanent insurance that's very flexible, and has really taken off over the last say two decades or so. Inside the universal life space, you can buy products that are interest rate sensitive, meaning the money you put in grow like a CD, and you have your life insurance. Typically those rates will be better than CDs. You have variable life insurance that invests money in what we call separate accounts, that looks similar to a mutual fund. So now, you have access to the marketplace. You can make some money inside your life insurance policy. Some of the interesting things about these products is, if a life insurance policy remains in force, and you don't break certain rules, the taxation of the values are not taxable. So the loans you take out of a policy, you don't pay taxes on. So there's a lot of interesting things you can do with life insurance. You should talk to an insurance broker about. Keep in mind that insurance companies need to make money, so they price lapsing into their policies. They know how often people will actually keep their policies on average. So permanent insurance actually makes an insurance company less money than term insurance. Keep that in mind when your buying life insurance as well, depending if you want to put the screws to an insurance company or not. Keep in mind all of these things when you're talking to your insurance broker. Thank you for watching today's discussion on the structure of the insurance market.