Life insurance as an investment
Life insurance has proved to be one of the best sources of investment in today’s world. The prices of all commodities in the world wide market are on the rise. This has also resulted in a hike of the prices of commodities like financial investments and shares. When it comes to choosing investments life insurance proves to be an ideal one. Life insurance includes various kinds of regular investments in the forms of premiums. These premiums are like the guarantee for the tenure of the life insurance policy. The policy holders can keep on benefiting from these benefits by claims and the maturity of the life insurance tenure. This ensures that the amount of money invested is returned to the policy holder but in a larger quantity.Term and whole life insurance
There are basically two kinds of life insurances which are most commonly used. These include the temporary life insurance or the term insurance and the whole life insurance.a) Temporary life insurance
Temporary life insurance is also known as the Term life insurance or 'term assurance' because the policy provides for the insurance coverage of a specified term or limited number of years. In this type of insurance there is no accumulation of cash value and premiums. The policy holder can only by protection for death and nothing else. While choosing this insurance there are three factors to be considered which include the length of coverage, the premium to be paid and the benefit of death or the face amount.
b) Permanent life insurance
Permanent life insurance is the kind of insurance where the policy holder continues to be in line till the policy pays out or matures. There are instances when the policy owner fails to pay the premium around the due time. But this life insurance policy cannot be canceled by the insurer with fraud cases being the only exception. Here the policy holders benefit because of the building of cash value that reduces the amount at risk. This risk includes the factors to both the insurance company and the insurance expense over time for the policy holder. There are three kinds of permanent insurance which are whole life insurance, universal life insurance and endowment.
a) Whole life coverage
In this form of insurance there is a level premium and a cash value table that guarantees death benefits, cash values, fixed and annual premiums.
b) Universal life insurance policy
These life insurance policies are similar to the whole life insurance policy but are generally less expensive as compared to the whole life insurance policies.
c) Endowments
Endowments are more expensive in terms of annual premiums since the premium payment period is shorter.
