A lot of people have been approached about using life insurance as an investment tool. Do you believe that life insurance is an asset or a liability? I will discuss life insurance which I think is one of the best ways to protect your family. Do you buy term insurance or permanent insurance is the main question that people should consider?
A survey suggests that 45% of British men and 38% women are insured for a life cover. Again, both the percentages are quite low. Moreover, its general psyche that women who do not earn do not feel the pressing need of an insurance. It was observed by Cancer Research that more than 130 women die every day due to breast cancer. With such an increasing number of women health issues, women should not keep themselves without a life insurance cover. Again 1 in 3 people is likely to suffer from critical illness. This way, life insurance cover is vital for both men and women. Ignoring a life insurance cover could prove fatal as your family would be left with many financial burdens.
Essentially, life insurance became one of the felt necessities of human kind due to the unrelenting demand for economic security, the growing need for social stability, and the clamor for protection against the hazards of cruel-crippling calamities and sudden economic shocks. Insurance is no longer a rich man’s monopoly. Gone are the days when only the social elite are afforded its protection because in this modern era, insurance contracts are riddled with the assured hopes of many families of modest means. It is woven, as it were, into the very nook and cranny of national economy. It touches upon the holiest and most sacred ties in the life of man.
I have read in various journals and run mathematical equations myself which basically show that if you have a need for insurance beyond 20 years that you should consider some amount of permanent insurance. This is due to the tax advantage of the growth of the cash value within in a permanent policy. I am divorced and have taken care of my children should I die. I probably no longer need as much insurance as I now have. I have earned a great return on my policies and have paid no taxes. I no longer pay the premiums, because there is so much cash in the policies.
A good financial planner will always advise you to buy term insurance plan. A term plan is the purest form of insurance and is a straightforward protection policy. The premium of term insurance plans is much less than other types of insurance plans, and it leaves the policy holders with a much larger investible surplus that they can invest in investment products like mutual funds that give much higher returns in the long term, compared to endowment or money back plans. If you are a term insurance policy holder, under some specific situations, you may opt for other types of insurance (e.g. ULIP, endowment or money back plans), in addition to your term policy, for your specific financial needs.