There's a calculation many people work through: "if I pay for twenty years, how much will I have paid in total – and how much will my family receive?" It's a fair question, and it deserves an honest answer, even a nuanced one.
- With a long payment term, the total premiums paid may approach, and in some cases even exceed, the sum insured.
- The value of insurance isn't a "return": for accidental death, cover is typically complete from day one; for death from illness, it follows the waiting-period rules — savings, by contrast, would need to accumulate first.
- When premium payments end (tied to age, or a chosen term) together with your entry age is what determines the ratio.
The calculation worth doing
The estimate is simple: the premium multiplied by the number of years it's paid – set against the sum insured. At a younger entry age and with a shorter payment term, the ratio is typically favourable; at a higher entry age, with a long payment term, total premiums may approach the sum insured. On top of this comes the twin effect of indexation: the premium and the sum insured rise together. On request, I show this estimate in the offer comparison table – without softening it or dressing it up.
Why doesn't this make it a "bad deal"?
Because insurance isn't savings, it's the transfer of risk: protection covers the full sum from day one (subject to the rules of the waiting period). For someone who passes away just a few years after taking out the policy, it pays out many times what was paid in; for someone who lives a long life, the ratio worsens – but for decades in between, there was the certainty that the matter was settled. That certainty is the real service the product provides – and savings only offer it once they've actually accumulated.
When does the ratio signal a real problem?
If premium payments would run for life or for a very long time, and the estimated total already significantly exceeds the payout at the time of taking out the policy – in that case, it's worth looking at a different product, a shorter payment term, or a partly savings-based approach instead. And if the premium can only be managed under strain: a policy that lapses early gives the worst ratio of all. In these cases, my job is to say plainly: this isn't worth doing as it stands – let's look at something else.
How can the ratio be improved?
Three levers can help. Entry age: taking out the policy earlier gives a more favourable ratio. When premiums end: an age-linked or shorter chosen term caps the total amount paid. And product choice: premium discounts (annual payment, group collection – where available) and the indexation rules also matter. This is the point where comparing several insurers is worth real money – the comparison table makes this visible.
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