Life insurance should be a very important part of the investment portfolio of any individual. It is intended not to create wealth but ensure financial security. Having life insurance should be a necessity for most people because it is something that loved ones will get in the case something untoward happening to them. Through the right insurance policy, you can give your loved ones the things that they deserve even in your absence and Life Insurance gives you the assurance that your family is secured and protected.
If you want to make sure that your families standard of living is not compromised in case you are gone, it is extremely essential to look for life insurance and invest in the right products. Aside from that, you will also enjoy other benefits with a life insurance policy such as tax-reduction options and in some instances, capital gains over the long term.
Having the right life insurance cover is very important at every step of life most especially if you are the breadwinner of the family. In recent years, policies on life insurance have gone through a lot of positive developments and now, it will help in paying for many things when the assured dies. That includes replacing the income of the wage earner, paying for a housekeeper, paying for your children’s education, paying off bills, buying out business partners, paying for the costs of the funeral, paying off medical expenses and even paying of the wedding of a son or daughter.
The main goal of insurance cover would be to secure your loved ones security and those who depend on you. If you decide to invest in life insurance, first it is important to understand aspects like your financial status, future commitments and liabilities and opt for a policy suitable to your needs in the longer run.
Generally, there are many insurance products to select from including term insurance, endowment policy, whole life and others. Whole life insurance policy will cover the insured for their entire lives and at the same time building cash value. One of the benefits you will get if you opt for whole of life is that it helps with Inheritance Tax (IHT) planning Because when you die, IHT will be charged at 40 per cent on all your assets that are worth more than £325,000 (in the 2012-13 tax year)
Term insurance on the other hand covers the insured for a specific period of time therefore the premiums are fixed rates. In this type of life insurance policy, a determined sum of money known as sum assured will be paid to the beneficiaries in the event the policy holder dies within the term of the policy.
There are two ways a policyholder will benefit from a pure endowment insurance policy. In case he or she dies during the tenure, the beneficiary will get the amount assured. If the person survives the tenure of the policy, he will get back the premiums paid plus interest on the investment and benefits such as bonuses. Aside from these products, there are also other types of life insurance cover that can offer various benefits.