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What is the benefit of Life insurance?
Many people in India ignore buying an insurance policy because they think it is an unnecessary investment until a sudden mishap or accident brings them to realize the importance of it. Life can be quite unpredictable, and although you cannot predict uncertainties, you can be well prepared to deal with it. One of the best ways to cope with the uncertainties of life and ensure that your loved ones are protected financially in the face of adversity is to invest in a good life insurance policy.
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Providing protection and financial security to the loved ones is the smoothing that everyone longs for and a life insurance policy is the best way to accomplish that. Apart from financial security and protection, there are many other life insurance benefits, which are discussed below:
- DEATH BENEFIT
- VALUABLE RETURN ON YOUR INVESTMENT
- TAX BENEFITS
- AVAILABILITY OF LOAN
- AIDS IN FINANCIAL PLANNING THROUGH DIFFERENT LIFE STAGES
- GUARANTEED INCOME
- ADDITIONAL COVERAGE
- SECURITY OF BUSINESS
DISADVANTAGES OF LIFE INSURANCE
- CAN BE EXPENSIVE FOR OLD-AGED PEOPLE
- THE RETURNS ON LIFE INSURANCE ARE NOT SIGNIFICANT
- INSURERS MAY NOT PAY THE BENEFIT
- COMPLEX POLICIES
Insurance Types - Level Premium Whole Life & Permanent Insurance
Life Insurance is a unique type of insurance that protects the life of an individual or family. There are two broad types of life insurance term life and whole life insurance. Whole life is often described as permanent life insurance, which covers a number of different subcategories, such as variable life, traditional whole life and universal life. The other main type is variable life, which is less expensive than whole life policies, but not as secure.
Whole life insurance is a type of insurance that is based on what the company may gain from the policy. The premiums are based on what is known as risk - the risk that the insurance company may lose money on the investment it makes in you or your family. The type of risk may be high or low; the premiums will be adjusted accordingly. While this seems a bit strange to many of us, whole life insurance explained how it works. Basically, when you purchase insurance coverage of some kind, the insurance company may invest the money you pay into a fund, which is then invested to earn interest.
The company makes money when the amount invested grows to a point where more money is earned than being placed in a reserve. When this happens, the company makes money on the interest portion of your investment. The company may pay dividends on the dividends earned, depending on how much has been earned. One of the benefits of purchasing a universal life insurance policy is that the policy can grow gradually with an interest only payment, allowing the holder to have a lump sum benefit at the time of the policy's demise, instead of just being paid a regular monthly benefit.
Two other major types are variable and term life insurance policies types. These types work in slightly different ways, so understanding these types is important. For example, with a variable life insurance policy, the value of the policy is determined when the insured dies. The same is true for term life insurance policies.
These two insurance coverage types are usually purchased by people who have an interest in protecting their families in the event of their death. Typically, these are better choices than the traditional policies simply because they give more flexibility. In order for you to get the best deals on these different types, you should consult with an experienced professional life insurance agent. He or she has the experience necessary to help you make an informed decision about which policy would work best for your particular situation. You can learn more about choosing from the different types of policies by visiting The Association of Universal Life Insurance.
There are a couple of different types of whole life insurance policies. The first is level premium whole life insurance. Level premium whole life insurance gives the insured a lump sum benefit upon the death of the insured. The second is permanent life insurance where the insured pays a set amount throughout his or her lifetime in return for a certain amount of cash buildup.
Both of these insurance types have their own benefits and drawbacks. Level premium whole life insurance has a cash buildup designed to provide financial support to the survivors of the insured's family in case of his or her untimely death. However, the premiums paid to increase as time goes by, thus decreasing the savings that the beneficiaries of the policy will receive upon the demise of the insured.
Permanent insurance has the same cash buildup benefit throughout one's lifetime. However, the premiums paid to increase with each renewal. As a result, the value of the policy decreases over time. Choosing to purchase permanent insurance allows you to keep more of the money that you earn throughout the lifetime of the policy while also having an opportunity to increase the value of the policy should you find yourself in need of extra funds. All in all, the choice between level premium whole life insurance and permanent insurance is a personal one and one that you should make carefully.