Insurance Is Investment For Future
What Is Insurance
Insurance is a financial safety net, helping you and your loved ones recover after something bad happens. when you suffer a loss that’s covered by your policy and file a claim, insurance pays you or a designated recipient, called a beneficiary, based on the terms of your policy.
Life insurance is something you may consider adding to your financial plan if you're interested in providing a measure of security for your loved ones.
Relationship Between Insurance And Wealth Building
There're many different types of insurance to look at, life insurance, health insurance, home insurance, and Auto insurance, etc.
Today, we will only discuss Life Insurance, the important piece in the wealth building process.
A smooth sailing? or ended prematurely.
Wealth building is a long process, it might take 5 years, 10 years, or even 20 years.
Uncertainties in life could crop up at any moment, such as an unfortunate death or a medical emergency. The most difficult thing about insurance is that you’re paying for something you hope you never have to use. Nobody wants something bad to happen to them. But suffering a loss without insurance can put you in a difficult financial situation. It means all the hard work you have put in and the fortune you may already built in the pasted years. Mostly likely will come to an end.
Types Of Life Insurance
There are several variations of life insurance plans, It is important to understand the types of policies you need and can purchase.
They generally fall into two categories: Whole life insurance and term life insurance.
Term Life Insurance
Term life insurance is designed to cover you for a set term, hence its name.
You may purchase a 20-year or 30-year term life policy, is bought for a discrete period of time at a fixed premium. As long as you die within that period, term life insurance will pay an agreed upon amount to your beneficiaries. It will not pay if you cease to make payments or if you die after the term has expired.
Term life is generally less expensive to purchase compared to permanent life insurance. That's because the insurance company assumes less risk since you're only insured for a set time period. The younger and healthier you are when you buy a term life policy, the lower your premiums are likely to be.
Whole Life Insurance
Whole life insurance, on the other hand, covers you for life as long as your premiums are paid. Certain types of permanent life insurance can also have an investment component that allows policyholders to accumulate a cash value.
In addition to including a basic death benefit, whole life insurance includes an investment component that is meant to help the customer grow his or her wealth. This makes whole life insurance substantially more expensive than term life insurance.
The investment portion of whole life insurance grows tax-free. You can also borrow against the cash value to buy a house or pay for your children's college costs, tax-free.
Is Life Insurance A "Smart" Investment?
When deciding whether life insurance is a good investment, it's important to understand the types of policies you can purchase.
Using permanent life insurance as an investment might make sense for certain high-net-worth individuals looking to minimize estate taxes.
On the other hand, insurance is still a good investment to safeguard you and your loved one. And give you peace of mind while you're building the wealth.