Dorothy Philbin | CNBNews Columnist
Is there any business out there whom we can trust? I would say with small mom-and-pop stores - yes. But the bigger the business, the farther they stray from the ethical business. Here are two examples:
I have been getting e-mails almost daily from Public Service offering me a free thermostat. I learned years ago that there is no such thing as a free lunch. PSE&G was so persistent that I decided to research what was going on. I found an article in USA Today from 2019. The article discussed a woman from Texas who accepted a free thermostat only to later learn that the new thermostat could be adjusted remotely from the power company. So, when this woman set her heat or air at 70 degrees the power company would adjust it +/- 4 degrees. Her house could be anywhere between 66 to 74 degrees, and she could do nothing about it.
I'm sure the company hid this somewhere in the paperwork she signed but probably in very small print.
The second case is the $9.95 life insurance from Colonial Penn. Alex Trebeck used to advertise for this company, but he always said "$9.95 per unit." Once Alex died the ads changed to delete the "per unit" part. I wondered why. One might think that $9.95 would buy as much life insurance as you need. Not true.
The amount of insurance you get for $9.95 depends on (at least) your age. The actual criteria has never been released so it is possible/probable that men pay more than women or maybe the city you live in plays a part. We just don't know. What I do know for a fact is that a male relative who was 65 years and had no life insurance. I went on line and got a quote for him for $3,000 coverage. That is no where near the $9,000 Colonial Penn, and others, scare you by telling you that is the price of a funeral. The quote I got was $151.00 per month. What they also don't tell you is they, like many life insurance companies, don't pay for a death within the first two years after the policy was written. They will give you back the premiums paid during that time plus interest.
The surprising part in this case is that if my relative had died after 23 months, his premiums ($3,508) would have been returned. If he lived just one more month his policy would have paid only $3,000. Colonial Penn would have made $508 profit if my relative lived just one more month.
There are several lessons to be learned here. As we all know - the house (or insurance company) always wins. In Colonial days insurance was outlawed in some states as it was considered gambling. I'm gambling that I will die at just the right time and the company is gambling that I won't. Also, in the case of my relative if he had put the $151 per month into the bank he would have accumulated the needed $3,000 in less than 20 months and would never lose the additional after that.
I am not trying to discourage anyone from getting life insurance - you owe it to those you leave behind. What I am suggesting is that you get life insurance when you are young enough to qualify for reasonable premiums that you can afford.