Life Insurance too good to be true? 75% ROI

[periphery831]

If I pay in 8600HKD for 20 years (172HKD total) and the payout is 672,000HKD which is around a 75% return when I die, is that normal?

I find a 75% ROI hard to believe.

[Tom_UK]

And what about if you don’t die?

[huja]

And what about if you don’t die?

That won't be an issue. With that kind of return the beneficiaries have what economists call perverse incentives.

Take away . . . make sure you've worth more alive than dead to your loved ones.

[periphery831]

And what about if you don’t die?

The whole point I have life insurance is for my kids. I don't intend on seeing that money.

That won't be an issue. With that kind of return the beneficiaries have what economists call perverse incentives.

Take away . . . make sure you've worth more alive than dead to your loved ones.

Haha, for sure. That still doesn't explain how they can make money from a 75% ROI?

[Nep]

How old are you?
suicide is usually a reason for them not to pay out

[periphery831]

How old are you?
suicide is usually a reason for them not to pay out

35. No chance of suicide.

[JAherbert]

it is an insurance company, it's their model, collect money in advance and afterwards find 20 reasons to avoid paying out

[Drunken Master]

When is the payout? In 20 years or when you die? If the latter the payout is in 50 years when you will be 85 since 85 is the average life expectancy for males in HK. Can you calculate ROI for that scenario?

[periphery831]

When is the payout? In 20 years or when you die? If the latter the payout is in 50 years when you will be 85 since 85 is the average life expectancy for males in HK. Can you calculate ROI for that scenario?

The payout goes to my family when I die. I just pay it for 20 years and then once I die, they get it.

[Drunken Master]

I don't know how to calculate ROI on annual contributions but to make it simple if you were to invest 172k now and get payout of 672k in 50 years then annualized ROI is 2.7%.