Theory of Decreasing Responsibility
- Theory of Decreasing Responsibility
The Theory of Decreasing Responsibility is an insurance sales philosophy promoted by Primerica relating to term life insurance. Their philosophy is that insurance should be purchased with the theory in mind. The theory assumes that the financial responsibilities of the insured are temporary and insurance should be purchased to offset those responsibilities. These responsibilities include paying consumer debts, mortgages, funding children’s education and income replacement.
With a proper plan, the theory holds that each of these responsibilities is temporary. A person can pay off their debt and mortgage, owning their home outright. Children do grow up and leave home becoming independent of their parents support. And using concepts like buy term and invest the difference a person should become financially independent having accumulated enough wealth to retire and no longer need to work. At this point the insured could self-insure and discontinue the life insurance program.
The theory also assumes that having investments on hand that produce income, and/or can be converted to cash is preferable to having insurance with a monthly premium. As an example $1,000,000 worth of investments or even just cash in a savings account is preferable to $1,000,000 worth of insurance.
The theory holds that with a proper plan the need for life insurance is obviated. The only challenge in this approach is that the insured must take responsibility and consciously plan to become financially independent. If they do not, or are not able, they may not have the assets they need to self insure.
External links
* [http://www.primericafinancialsolutions.com/public/financialneeds/protect_your_family.html The Theory of Decreasing Responsibility] Chart illustration
Wikimedia Foundation.
2010.
Look at other dictionaries:
Theory of the firm — The theory of the firm consists of a number of economic theories that describe the nature of the firm, company, or corporation, including its existence, behavior, structure, and relationship to the market.[1] Contents 1 Overview 2 Background … Wikipedia
Term life insurance — or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client… … Wikipedia
Whole life insurance — Whole Life Insurance, or Whole of Life Assurance (in the Commonwealth), is a life insurance policy that remains in force for the insured s whole life and requires (in most cases) premiums to be paid every year into the policy. Contents 1 History… … Wikipedia
Quaternary extinction event — Late Pleistocene landscape of northern Eurasia The Quaternary period saw the extinctions of numerous predominantly larger, especially megafaunal, species, many of which occurred during the transition from the Pleistocene to the Holocene epoch.… … Wikipedia
education — /ej oo kay sheuhn/, n. 1. the act or process of imparting or acquiring general knowledge, developing the powers of reasoning and judgment, and generally of preparing oneself or others intellectually for mature life. 2. the act or process of… … Universalium
china — /chuy neuh/, n. 1. a translucent ceramic material, biscuit fired at a high temperature, its glaze fired at a low temperature. 2. any porcelain ware. 3. plates, cups, saucers, etc., collectively. 4. figurines made of porcelain or ceramic material … Universalium
China — /chuy neuh/, n. 1. People s Republic of, a country in E Asia. 1,221,591,778; 3,691,502 sq. mi. (9,560,990 sq. km). Cap.: Beijing. 2. Republic of. Also called Nationalist China. a republic consisting mainly of the island of Taiwan off the SE coast … Universalium
japan — japanner, n. /jeuh pan /, n., adj., v., japanned, japanning. n. 1. any of various hard, durable, black varnishes, originally from Japan, for coating wood, metal, or other surfaces. 2. work varnished and figured in the Japanese manner. 3. Japans,… … Universalium
Japan — /jeuh pan /, n. 1. a constitutional monarchy on a chain of islands off the E coast of Asia: main islands, Hokkaido, Honshu, Kyushu, and Shikoku. 125,716,637; 141,529 sq. mi. (366,560 sq. km). Cap.: Tokyo. Japanese, Nihon, Nippon. 2. Sea of, the… … Universalium
United States — a republic in the N Western Hemisphere comprising 48 conterminous states, the District of Columbia, and Alaska in North America, and Hawaii in the N Pacific. 267,954,767; conterminous United States, 3,022,387 sq. mi. (7,827,982 sq. km); with… … Universalium
