# classification

First of all, we need to understand that insurance can be simply and brutally divided into two categories according to its essence: consumer insurance and return insurance.

``Keep these two types in mind so that no matter what kind of insurance you get recommended, you'll be in a good position to determine if it's suitable!``

# The story

``A hundred apprentices come to a five-star hotel to learn how to cook. They have to study hard for ten years before they can take up a job on their own. Apprenticeship salaries are not high, only a few hundred yuan a year, but five-star hotel tableware is very expensive, a plate can cost 1,000 yuan. If an apprentice accidentally broke a dish, he would not only have to pay the 1,000 yuan in compensation, but also could be fired, unable to continue his studies and work. So the apprentices were very careful, but every year someone broke the plates. That year, a clever accountant came to the tastehouse. He put forward a plan: If each apprentice would pay a little money each year, pool the money, and whoever broke the plate would use the money to pay for it, and no apprentice would be punished. Everyone thought it was a good plan and was willing to pay a little for peace of mind. So how much do I have to pay? The accountant asked, "About how many plates do you break in a year?" We want to think to answer: "about four" (predetermined mortality rate). So if you have to pay for four plates in a year, you're going to have to pay 40 dollars per person. At this point, the accountant suggests that you hire a broker to help you manage the money in case you run away. According to the market conditions at that time, it would cost 600 yuan a year to hire a broker and 400 yuan to rent an office for a broker (booking fee). This 1000 yuan cost apportion to each apprentice body is 10 yuan, so calculate down each apprentice a year only pay 40 (safeguard cost) +10 (expense) =50 yuan, you can break the dish have admire, so you can not be fired. (Short-term consumption insurance was born) time fluttered, more than half a year passed, actually no one broke the plate. At that moment, one of the most cautious people thought, "I'm the last one to break a plate. If I lose fifty dollars this year, I'll lose 500 dollars in ten years!" No, I have to talk to the accountant. This person said so with the financial, financial said: "that is simple, you don't want to pay not to pay, anyway out of the risk to bear." Beware of people who feel insecure: I can't afford to break a plate if I do. Ask finance: "there is no way to have the best of both worlds?" With a smart financial mind, since he wants to get his principal back, I'm going to charge him more money, invest the extra money, and get his principal back with the proceeds of investment. So present market yield rate is probably 12.4% (book interest rate, domestic book interest rate is generally not more than 2.5%). If you want to get your principal back after 10 years, charge 40 (insurance cost) +10 (expenses) +50 (investment cost) =100 yuan now. So the smart financial said: I also believe that you will not break the plate, but in case of the matter who also dare not guarantee, or you see so, you pay 100 pieces of deposit every year (both insurance), if broke the plate this deposit will be confiscated, if ten years did not break, when the time comes 1000 dollars I original return you. Careful people themselves a calculation, a few years to break the plate, would have to compensate 1000, now if ten years in the middle of the broken as long as the compensation of hundreds, if ten years did not break the plate, they did not lose a penny, really the best of both worlds! "But we have to have an agreement," the financial department said, "since you pay the deposit by 100, this ten years have to pay, midway also can't take the deposit back, otherwise you will be in breach of contract." Careful people think that they will not lose, on a promise: "no problem!" This year, careful people did not break the plate as expected. Seeing that most of the other workers lost 50 yuan, he could not help being proud of himself and told his plan to several good friends. Soon the news spread, and everyone felt that they were not so unlucky as to be the one who had broken the dish, so they demanded a deposit. The finance department was also happy, so in the second year, a deposit of 10,000 yuan was collected. The finance department left 4000 yuan for the money to compensate the plate, 1000 yuan for expenses, and the remaining 5000 yuan for investment. It was a great year for the market, the return on investment rose to 15% (profit margin, 12.4% predefined interest rate), and the apprentices broke only three plates (dead margin) and hired a broker for only 500 (fee-margin). By the end of the year, I had made more than one plate of money. Hearing this, he found the accountant and said, "It's unfair that you have made so much money with our money, but you don't share it with us." The financial thought for a while and said: "I make money by my own mental and physical strength, and I also have the credit. How about this, you pay more, 150 yuan a year (share out bonus insurance), ten years later I not only return you 1500, but also give you 70% of the profit every year, how about?" Careful people listen to, feel that this is more cost-effective, so he immediately handed over 150, back to encourage other workers also pay a little more. This year coincides with the stock market rise, financial earned a lot, at the end of the year, everyone looked at their account, not only did not like last year spent 50 yuan, but also more than a few dollars of bonus. So the financial instigator said: "next year's market will be very good, we are not as good as their urgent money to me, in addition to the deduction to help you pay for the security cost of breaking the plate 40 yuan, and deduct 10 yuan of administrative expenses. I will help you with the operation of the extra money given to me. I will settle the interest for you every month, and it is interest rolling. "But we've paid so much money. What if we need it in a hurry?" Someone asked. The accountant said, "That doesn't matter. You can withdraw the money at any time when you need it." "Then what will you do if your investment loses money?" "Asked another worried voice. "Don't worry, I promise you that I will not give you less than 0% interest every month. And the annual interest rate must be above 2.5% ", the people thought, we do not know what investment operation, the finance is a smart man, trust him! So all the people were handed over, one hundred and one hundred and eighty. (universal risk) the end of the third year, everybody account on as expected and many a number of surplus, some people feel that earn really many, but also some people feel that the money that invest is not many did not earn the money that want to get in the mind. They found the smart finance again. Finance said, Gains high project has, of course, but the risk is big also, if you are not afraid of risk, I can help you in these projects, so, I help you set up a few investment account, there are high risk, have a lower risk, we can according to your own preferences to select investment account, select ok, let me help you, I only charge you a small management fee of a few percent of the value of the account every year, and the rest will go to you. But in case of any loss, please don't blame me. As long as the deposit is over five years, I don't even deduct the commission. People feel they can make more money this way, so they turn all the money over to the treasurer. A new apprentice arrives, and everyone explains the attraction of the program to him and urges him to pay a little more. The new apprentice listened to this at a loss, and finally figured out the whole story. He said, "My family is in trouble, so I can only pay 50 yuan to compensate for the plate." Not so high a return."``

# conclusion

From the story, we can see that the premium is composed of three parts: the cost of protection + expenses + the money invested = the premium. No matter what you buy among them is consumptive model risk, still be share out bonus, omnipotent, cast connect risk, annual safeguard cost and charge were consumed. Insurance company can return this, share out bonus, pay interest, nothing more than the money that is taking a client to invest, distribute investment income to a client again next. And since insurance companies are unlikely to invest too aggressively. So the investment income of insurance companies is relatively low. Therefore, it is suggested to buy consumption-type insurance as far as possible, so that you can buy a high level of insurance at a very low price. Then invest the savings in other investments that can bring higher returns, such as bonds, fixed funds, etc. You’ll be more efficient with your money.

``In the above story, with the progress of the story, people's focus is changing and they begin to pay attention to the security. With the development of things, people pay more and more attention to the benefits while ignoring the essence of insurance. Therefore, it is suggested that when buying insurance, people should not think too much about the return on capital, but should focus on the nature of insurance protection. It is the individual's aversion to risk that should be the original intention of buying insurance.``