Insurance is a pledge or guarantee for a specific potential loss in future which is characterized by exchange for periodic payment. The purpose of insurance is to guard the financial well-being as well as interest of a company, individual or any other entity which could be affected in the case of potential and unexpected loss in future. Insurance vary in types, some are requirements of the laws of particular states while others are optional. Insurance types vary from car, health, business, disability as well as life insurance among others.
Features of Life Insurance
Features of life insurance vary greatly depending on the type of government. In federal governments however, the following are salient features of life insurance.
- One can take loans and make early withdrawals without penalty. This feature makes the funds accessible in times of need.
- Premium or individual member withdrawals may be tax free. This ensures a reduction in the tax burden and therefore brings forth a cheap option of accessing money as well as benefits of a life insurance. These features among others ensure that an insured individual lives a life free of day to day stress.
Advantages of life insurance
Life insurance has a number of advantages.
- Asset protection.
This is considered the core benefit of life insurance. This benefit caters for the financial benefits and interests of one’s family. Life insurance products have strong inherent proposition for wealth creation. A customer of life insurance therefore has investment options provided for by the insurer. This feature therefore provides a sense of security.
Allows for savings based on goals.
Conventionally, every individual has goals in life. Some of these goals can only be achieved through objective based savings. These savings could play fundamental roles of education, construction as well as meeting future planned and unplanned for events. Therefore, life insurance savings help the insured to meet future needs.
Provides for protection health and health expenses.
With the ever straining global economy characterized by increased standards and expenditure on basic human needs. The safest way to safeguard the future is by obtaining life insurance which might in future cater for unexpected health expenses. This therefore reduces future unexpected expenditures in catering of basic needs.
Life insurance allows for growth through dividends.
This is achieved by the fact that every end of a financial year, the insurance provider gives back to the stakeholders in the forms of bonus and dividends. This provides a boost economically to life insurance stakeholders and thus improves their quality of life as well as their living standards.
Life insurance therefore is a fundamental aspect of human life. It allows for asset protection in case of future unexpected events. Through asset protection, the implication is that social as well as economic protection is guaranteed. It also allows for goal based savings. These savings more often than not cater for future unexpected expenditures. It supplements for the ever rising health related expenditures which reduces the burden of unnecessarily spending too much on a health issue that could otherwise been dealt with using cheaper means. Through annual stakeholder bonus and dividends, life insurance boosts the living standards of individual stakeholders.
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