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The earliest partership between Man and Dog in partnering to prey for food, protection and survival was designed to minimize the risks in hunting and sharing the gains for mutual survival and protection between man and dog. That partnership continues to thrive till date with some of the dogs finding ranks in human organisations.

Life insurance is like community partnership to share risks and to protect loved one’s from adversity. It serves many objectives at individual and community level.

Primarily aimed at adversity & risk management, insurance also helps as a legally protected way to save money and a method for diversifying investments through managed funds.

Benefits and disadvantages of life insurance as an investment tool for financial planning.

Types of Life Insurance:

Several types of life insurance exist including

For Individuals
Term Life
Variable
Universal
Whole life
Group Policy

Each of these insurance policies have different types of insurance coverage with
Term Life being the least and universal life being the most comprehensive. Term life insurance gives basic coverage for lower premiums, but may also accumulate a cash value over time depending on company. Variable Life and Universal Life allow the policy holder to also invest a percentage of the premiums in investment instruments managed by the insurance company and whole life is just that, an insurance coverage that offers payment to beneficiaries over the life of the policy holder.

How to Find a Company to provide Online Quotes
With hundreds of insurance companies willing to give you a quote, online or offline, it is worthwhile to register for insurance quoting services of online sites such as AdvantageTermLife to help you compare the policies and rates to reduce premiums paid monthly.

Benefits of Life Insurance:

There are several benefits in getting a life insurance and there are many types of insurance policies to match your long term financial planning objectives.
Some people may not believe there are benefits because the only people who benefit may be the beneficiaries.
While this is true to an extent it is not the whole picture. A few of the key benefits of life insurance are listed below:

Peace of mind: Knowing that people one cares about will not become destitute in the event of death, loss of income, death related expenses etc. can be a comforting thought.

Tax deferred savings: Some life insurance packages offer tax-deferred growth. Firstly, having a lower taxable income can lead to more retained earnings at the end of the tax year.
Secondly, if tax rates on income go down in one’s retirement, additional tax advantages are available at the time of redemption.

Legal security: Money contained in life insurance policies is legally protected from certain law suits, and garnishments. Knowing that can offer added financial security and protection to an otherwise potentially accessible financial portfolio.

Diversification: Since many life insurance companies manage mutual funds, this can offer the policy holder a means to diversify one’s investments thereby lowering overall investment risk. Some of these mutual funds may own shares in international companies that may otherwise be impractical to invest in.

Guaranteed returns: Some insurance policies may also offer guaranteed returns. This in effect offers double the utility i.e. one is not only insuring beneficiaries in the event of death but is also making an investment.

Disadvantages of Life Insurance:
Long Term: Life Insurance is generally good for long term financial planning.
Low Returns: Life insurance may not offer the highest returns on invested money.
Life Insurance Provider: Not all life insurance providers offer the same protection, credibility, claims processing capacity. Depending on insurance provider, one’s policy may or may not be fully protected from insolvency and/or bankruptcy of the insurance company.

Life insurance is an investment and if the policy is chosen well and the investment products selected carefully, a life insurance policy can be a beneficial for several financial planning objectives in one go. In addition,one may hold one or more different types of policies with one or more insurance providers, which may provide expanded protection, premium savings and greater financial protection.

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