Is Life Insurance A Smart Investment?
What is insurance?
According to an article published on Investopedia.com, an insurance refers to “a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.” Is Life Insurance A Smart Investment in Singapore
What is life insurance?
According to an article published on Investopedia.com, life insurance refers to “a contract between an insurer and a policyholder. A life insurance policy guarantees the insurer pays a sum of money to named beneficiaries when the insured policyholder dies, in exchange for the premiums paid by the policyholder during their lifetime.”
There are many, many different types of life insurance plans out there. Some of these include term-life insurance, whole-life insurance, single premium insurance, level term insurance, guaranteed insurance and so many more.
Each of these policies are different and what an individual decides to take up will most definitely need to be considered according to his identified list of needs.
Most ordinary life insurance policies consist of two main components. This includes a death benefit and a premium. Term life insurance has these two components, but permanent or whole life insurance policies have an additional third component: a cash value component.
With that being said, is life insurance a smart investment?
Generally speaking, when it comes to life insurances being a form of smart investment, most individuals will be referring to whole life insurance, and other types of permanent insurance that comes with a cash-value component. In this case, a term life insurance policy, lacking a cash value component, cannot be considered an asset.
However, permanent life insurance policies that possess an investment component will allow individuals to grow their wealth on a tax-deferred basis. In other words, an individual will not have to pay taxes on any interest, dividends, or capital gains on the cash-value aspect of a life insurance policy. That is, until you withdraw the proceeds, of course.
When it comes to term life insurance policies, most plans offer high coverage at affordable premiums for the majority of a population. This is usually due to the absence of maturity benefits and other complexities associated with other life insurance policies.
As such, the extensive coverage promised at low premiums by term life insurance policies are a great push-factor when it comes to the purchasing of a life insurance plan.
Yet another benefit associated with permanent life insurance has to do with how an individual will not lose out on his coverage after a specific period of time. While a term policy ends at the end of a policy term, a permanent policy can cover an individual for the entirety of his or her life.
As such, if you foresee a situation where others may be dependent on you – beyond the years of coverage a term policy provides, permanent life insurance can be a smart investment for yourself.
All in all, life insurance, if picked correctly and in accordance with one’s needs, can be a smart investment.
With so many insurance providers, schemes and coverage differences out there, coming to a decision alone can be a pretty daunting task. With that being said, are you on the lookout for some advice on what to do when it comes to the topic of insurance?
Could use some help or professional guidance on the issue of insurance? Wondering what’s the next step to take? Read on below!
At TN Advisory Group, our services and expertise can be used to assist interested parties in relation to the various fields of finance. Some of these sectors include investment, insurance, retirement, corporate pensions, group employee benefits, business continuation, as well as general insurance purposes.
If you wish to know more about Smart Investment or any other enquiries, please contact us through Whatsapp or Email to schedule an appointment. We will get back to you as soon as possible.