Have you ever thought of being financially dependent on your children after you retire and no longer have a source of Income. Sounds terrible doesn’t it?. Think of this all your cash reserves are empty and all your investments that you made with the intent of seeing off your old age has been washed of the pipe and you have no other option other than depending on others for food, shelter and clothing. The very thought of this sends shivers down your spine…Doesn’t it?? After all it is hard predicting what is in store for the coming years. In order to ensure that you are spared of the embarrassment it is wise to opt for investment instruments that serve the purpose of long term financial security and gain. Investing in Life Insurance and its fellow products is a good investment option as it fulfills all your goals in the longer run.
It is important that you include Life Insurance policy in your investment portfolio. When you opt to invest in Life Insurance you not only invest for your future, but you invest considering your families necessities. Individuals who depend on you for a living could be deprived of an income in your absence (read demise). Hence it is suggested that you analyze every pros and cons before you opt for your Life Insurance Policy. Ideally a policy that you could afford to pay the premiums for in the longer run is recommended. Chalk out your monthly expenses and then settle in for an amount that you could afford on a periodical basis. Failure to pay the premium in stipulated time will result in the policy being confiscated by the insurer (Life Insurance Company). Also important is the coverage you get from the policy.
Life Insurance Coverage determines the period for which you are actually insured. They could vary. In whole Life Insurance you keep paying the premium through out the term of the policy, where as in term life policy you pay the premium till a certain time, after which an amount (depending on market conditions) is returned to you.
There are different types of Life Insurance Policies that are offered to you by the Life Insurance Company, the most prominent amongst those are Family Life Insurance, Whole Life Insurance, Premium Life Insurance and Term Life Insurance. When you opt to go in for Family Life Insurance, all your eligible family members get covered. This generally includes your spouse and children. Usually dependent children must be unmarried and fewer than 22-23 years of age, incapable of self support. The payment is simple. Usually if you are employed the employer deducts a fixed amount from your salary and hands it over to the insurer. This amount keeps being deducted and accumulated in your policy account until you retire or leave the company. After that it is returned to you. Premium life insurance is a type of term life insurance with return of premiums paid throughout the policy term. Like other forms of life insurance, if you die during the term of the policy, your family will receive the accumulated sum benefit of the policy.
Whole Life Insurance is a sub-part of permanent life insurance where the person is eligible to obtain protection through out his life. Here the Premium rates are constant through out; hence it is advised to invest in these policies at a very early stage in life. Life Insurance where the Life Insurance Premium is paid for a stipulated period of time (5-10-15 years) is called term Life Insurance. The premium rates here are bit on a higher scale compared to a Permanent Life Insurance. A major advantage of Life Insurance is that it serves as a major tax saving instrument. Under section 80CCC of the income tax ordinance amount invested in Life Insurance Policies is subjected to tax-exemptions. If an average investor has an annual income of more than the tax limit then the amount he will invest (till one lac) in Life Insurance will be deducted from his yearly income. This facility makes it much more appealing in terms of an investment module. With recession hitting the jobs market hard, the insurance industry is possible the only sector that hasn’t been affected, simple because of the genre it dwells in. The sooner you opt for Life Insurance, the sooner you start valuing your Life.
