Life insurance is most common and popular financial products carried out by the people. There are many types of life insurances like term life insurance, variable, universal and investments; so before choosing, analyse the pros and cons. It is a yearly expense and also huge security assets to the family in case of emergency.
In US, life insurance is basically taken to be an investment item for consumption. People generally invest that leads to wide hybrid investments like child plans etc. The hybrid products are found to be wasteful as separate investment is whole a lot cheaper. The life insurance companies doesn’t educate the people about the right product for the customer choice; yet each product has it’s own advantages, so choose accordingly.
What are the Advantages of Life Insurance?
Life insurance is basically thought as an asset but generally it is an expense. It is similar to a health insurance that make sure our proper health condition. If not in critical situations the money is used for the recovery process. Life insurance makes sure family economic status even after the death of the person. Hence, it is stable insurance.
Many countries allow compensate the premium that a person generally pays in the tax income of life insurance. Also the maturity some got is not chargeable in many places. Financial advisors mostly use this in order to decrease their tax load.
Term Insurance is known for its simplicity and less cost. They issue a huge sum in case the respective person is dead with no legal conditions. As the terms are easily understandable by the clients and used widely.
The flexibility of the life insurance coverage is the time limit. Time limit is the lifespan of the person. So, he/she can deposit the money until they die for their family. They can also set a target of 5, 10, 15 years if they meet the required amount quickly.
Government checks whether the insurance company has enough assets to cover one’s financial accounts. This provides the customer a satisfied feeling that the money will given by the company as soon they die. Government also ensures that the company has enough values that it doesn’t go bankrupt.
Variable and Universal Insurance:
Variable Insurance is the type that allows the person to change the premium. However, both the types provide interest in the cash amount.
What are the Disadvantages of Life Insurance?
Using it as an investment will be great loss to the people. Since, people eventually think that the money will be returned when something happens to them. But not everyone gets to be in favour of it.
Unnecessary insurance plans:
People should see to the necessity and plan for taking up the life insurance plans. But, when senior citizens, end up taking these plans, will only lead to loss. So here unnecessary conditions will be one of the drawbacks.
Complex Life Insurance plans:
The customers don’t try to get to know about the plans and they jump on to the complex life insurance plans like child plans, endowment, ULIP which in fact provides a sub optimal return of the money. Also, most agents provide a bad advice in order to get more commission money. Even the companies are profited by the ignorance of the customer.