Do you think that life insurance is an asset or a liability? Buying life insurance is one of the best ways to secure your family’s future. With the changing lifestyle and rising inflation, it is imperative for every breadwinner to focus on financial planning at an early stage. In general, the majority of people tend to concentrate on wealth creation with the protection element is slightly neglected or compromised. A financial plan of a person should be well prepared with a perfect blend of instruments to meet different needs of savings, wealth creation and protection. It should be customized to address individual needs at the various stages of life.
Many people have started using life insurance as an investment tool. While the main objective of buying a life insurance policy is to shield oneself from unpredicted eventualities, it also helps in wealth accumulation and preservation. If you add it as a component of financial planning wisely, it also provides access to liquidity at the right time.
Besides providing peace of mind to you and your family, life insurance proves to be one of the best investment decisions you have ever made. Traditional insurance policies feature minimum investment risk while providing long term insurance benefits with strict regulatory conditions to protect policyholders.
The majority of life insurance policies comprise of retirement income on maturity. Furthermore, it is possible to increase the coverage amount over time. This is an added advantage. So, those who are just starting their career or have a tight budget can start a small insurance premium and over time, you can increase insurance cover when you can afford slightly higher premiums. This helps you secure your family’s future with a better life cover for your family even when you are not around.
The premiums which you pay accumulate a cash value. The cash value of your insurance policy grows depending on the policy dividends, interest and/or earnings from the investments done by the insurance company.
When your insurance policy reaches certain cash value or matures to a certain age, you may have the option of taking a loan from the insurance policy. This can prove to be an important option considering your financial needs for child’s education, large purchase or any other investment. The cash value of your permanent insurance policy continues to grow tax-free. This is the most advantageous yet most unknown benefit of an insurance policy. Moreover, the dividends paid by whole life policies feature tax benefit. Thus, life insurance is a tax shelter for savvy investors and wealthy people. Furthermore, it is legal and legitimate way. Ultimately, life insurance policy proves to be a protected asset.
If you are considering using life insurance as an investment, then it is imperative to understand the insurance basics, benefits and the drawbacks of different types of policies. Some insurance companies and policies are more investor friendly with more flexibility. You need to evaluate different companies and their policies with all details including the fees charged for loans, limitations, etc. Also, you can ask about how your premium is going to the overhead and profit of insurance company. Keep in mind that though a good deal is essential, a stable, reputed and longstanding insurance company is the most crucial factor.
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