Financial illiteracy is one of the big reason a lot of people, every once in a while, feels disillusioned about the need and the choice of the correct financial instruments. The maximum they do is call on friends and family to take a better grip on the finances. However, it is important to acknowledge the fact that this area needs expertise or a dedicated service provider with a financial helpline to recommend the various investment avenues including the life insurance as the major one.
Life insurance as an investment
It is important to break the myth that buying a permanent life insurance policy (including term plan, whole life, universal, or variable universal life insurance policy) is an expense rather than an investment.
There are a number of questions that need to be answered such as why purchasing a term life insurance is an investment and not throwing the money.
Similarly, there are a number of best insurance plans with guaranteed returns that a permanent life insurance can offer. It works in a systematic manner where a part of the premiums are invested and some of it can be borrowed tax-free for various purposes such as child marriage or retirement.
To get the best deal out of the Insurance as an investment avenue, following factors should be kept in mind:
- How much is enough
Understanding that how much life insurance you need helps in choosing the best insurance plans for family and also the best insurance plans with guaranteed returns as per the individual needs. At the end, keeping the fact in mind that the whole point of insurance is to make sure that the dependents and family have enough to be taken care of financially after you, help a great deal in choosing the best insurance plans for family and self-employed individuals.
- Cost-value analysis
Policy buyers need to understand that there are a number of factors to be considered while taking the best plan. For e.g., while purchasing the permanent life insurance, part of the premium goes into a cash value account that generally grows based on policy dividends, interest, etc. Since each policy is different in terms of features, understanding the particulars of how it works just like an investment always helps. The best insurance plans with guaranteed returns in 2017 ensure that you have the freedom to borrow from the cash value of the plan for various important life events like retirement or children’s education without having to pay taxes on it.