Advantages and Disadvantages of Investing in Life Insurance

Advantages and Disadvantages of Investing in Life Insurance

On considering life insurance as a kind of investment, you’ll find it offers its own benefits and drawbacks. On buying life insurance you are making a considerable purchase that in many cases can prove to be worthwhile. Insurance policies like whole life insurance and universal insurance present the combined benefits of death and investment and thus attract many buyers. However, it is imperative to check the benefits and drawbacks of including life insurance in your investment portfolio. Let’s examine some of the advantages and disadvantages of investing in life insurance.

Simplicity

Buying a life insurance policy as an investment strategy makes things simpler for you, compared to other forms of investments. It particularly helps people who are too busy to pay personal attention that most investments necessarily require. As a consequence, they lose hold over their investments. On buying a life insurance policy as means of investment, you conveniently plan for your future and offer financial protection to your family.

Protection

It is vital for you to have some kind of life insurance when you need to protect your family. A life insurance policy offers protection to your loved ones in the event of your premature death. The added element of investment prompts many people to opt for life insurance policies, which in any case will provide the much needed protection to their families.

High Commissions

On considering life insurance as a kind of investment, one realizes that it carries rather high rates of commission. What adds to the complexity is the difficulty of assessing the exact amount of such commissions. Most often, this cost is concealed in very fine print. Even if buyers can manage to read it, very few are able to interpret the meaning because of the language used while writing it. Unless you have some background in insurance, you won’t be able to interpret it.

Costs

Simple life insurance provides benefits only if the policyholder dies. At the same time, life insurance presenting investment options could be rather expensive. Before you invest in a universal life or whole life policy, make sure to compare prices. You may realize that it is possible to save substantial amount of money per annum on buying straight term life insurance. The amount so saved could be invested in some other more profitable manner. Perhaps you would like buying an assortment of bonds, mutual funds and stocks with those savings.

Hopefully, making you aware of the advantages and disadvantages of investing in life insurance enables you to take a well calculated prudent decision.

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