Life insurance is a contract signed between the insurance seller and the buyer. The contract is a promise that the insurance seller will pay the buyer a sum of money when the insurer dies. The amount of money depends on the type of insurance and the premiums paid.
Life insurance is also often a way to ensure your family’s financial security because if you have children, money is quite essential to you, especially if the provider of the family passes away.
The pros and cons of having a life insurance
- Family protection
- Removes any worries so you have peace of mind
- Some benefits from life insurance are tax-free
- Easy to apply for insurance
- It can be affordable
- Can be an encouragement to save up some money
- Sometimes it’s not entirely necessary
- It’s not an investment so you might be better off investing in something
- The time you might have to wait to receive the benefits
- There are Some Instances Where Benefits May be Taxed
Death is inevitable, but when will you die?
You don’t know when or how you will die so life insurance is just basically preparing for when the time comes. If you have a family, life insurance can be a good thing to have just so that when you pass away, your family can pay the bills with the benefits, especially if you’re the one providing in the family.
If you don’t have a family, then there’s absolutely no point in having a life insurance since there will be no one to receive the money.
Removes any Worries so you have Peace of Mind
Life insurance will take some weight off your shoulders. You won’t feel too bad about passing away since your family is benefitting from it – mind you if you are dead you won’t mind much at all anymore!
Not only that, but life insurance also takes a massive weight off your family’s shoulders since they might think about the same thing; what will they do when you eventually die?
When you are still living, life insurance might only relieve some stress but, when you die, life insurance will do your family a lot of good.
You might think that all the premiums you paid for were for nothing, but that’s only when you’re still alive. Knowing that you might die any second if you are living someplace where there’s war, having a life insurance will remove most of the stress you have.
This means you will have a peaceful mind, you will produce more efficiently and you will be able to focus on what you’re doing than having distractions all the time.
The only problem with the life insurance industry is that it does have rather a reputation of trying to wriggle out of paying. There may be a whole raft of exclusions and requirements that have to be met for the policy to be valid. Of course, your premiums will be greedily accepted regardless of compliance and they will not be checking the small print until you want to claim.
It’s a sleazy business so check the small print with a large magnifying glass.
Some Benefits from Life Insurance are Tax-Free
Most of the benefits your family receive from the life insurance will not be liable to any tax.
So if you were to pass away, all of the money will go to your family and the government will not get much.
So you don’t need to worry about your family not having enough money to live, at least for a certain amount of time.
Though, there are some exceptions that will include tax to the government that I will be talking about in a while.
Just as death is inevitable, so is the increasing resourcefulness of the government trying to take your cash at every opportunity so insurance and pensions are a very tempting honey pot. Probably why there is such an abysmal lack of regulation of the industry for the benefit of consumers. Plenty of help for the insurers to make money and bailouts when they go bust too!!
Easy to Apply for Life Insurance
Nowadays, you don’t need an agent to sit and interview you for about an hour or two. You don’t even need to visit the doctor anymore.
You can do it online, it takes about 5-10 minutes to get life insurance, you just need to find some documents and fill out some applications on a life insurance website and you’re just about done.
This will save you a lot of time that you might not have since you have a family to take care of and look after.
One point about online insurance – just as above make sure you carefully read the small print and are in compliance because it is too late once a claim is needed. It’s also great business to write policies that you know half the population cannot cash in because of the buried exceptions intentionally disguised within it.
Safe in the knowledge most people don’t have the time or the smarts to decipher the legalese of the policy documents its money for old rope!
It Can Be Affordable
Life insurance can cost a whole lot. But if you didn’t know, there are many different types of life insurance that cost different amounts of money.
Some types of life insurance can be about as cheap as 15 – 30 dollars per month! You will understand though, that cheap policies mean lower payouts.
Life insurance can also be too expensive. Maybe you and your family only make so much money every month so you might have a budget that can’t be altered.
So maybe you earn $3000 a month and you have 7 people to live with, you think you can afford $15 a month without cutting out some food for the family?
I don’t think so.
Life insurance Can be an Encourage You to Save Money
Continuing from above, if you can’t afford enough money to buy life insurance because you have some other important things to pay for then you might be committed to save up for the life insurance fees.
Maybe this means to get another job or work harder for a promotion which might stop you or encourage you depending on mindset. But if you are really committed to earning a bit more money then you will do what you have to do to earn it.
This is called willpower, most successful people have willpower. It might change your life, who knows?
Sometimes Life Insurance is a Waste of Money
This might be the case for many people.
If you think that you and your family are making enough money already and there will be no financial issues then you’re simply wasting money every month so that when you pass away, your family will get something they don’t truly need because they are already stable and will continue to be.
So if you think it’s not worth it, you’re better off not having any life insurance at all.
Life Insurance is Not an Investment
Most people misunderstand that life insurance is an investment because you pay a lot of money and receive more money back. This problem is perpetuated by life insurance policies rolled up with pensions or regular saving plans. There is so much disguising and mis-selling still going on it’s really a scandal.
But sometimes, your family might be secure and healthy. In fact, you might end up dying after your family members even.
This is why most people who “invest” in life insurance end up losing money instead of gaining.
You’re better off investing in a business instead since you don’t need to wait to die before you get your money back.
The Time you Might have to Wait to Receive the Benefits
Following from the previous point, when your family does end up dying, you might have been a whole lifetime paying in for your benefits.
For example, you have an older sibling and you get a life insurance for him. If he doesn’t die in an accident or an incident, it’s likely he will die of old age, let’s say he dies at the age of 80, you’ll be around that age too, wouldn’t you?
What I’m trying to say is, just don’t have a life insurance if it’s not worth it. And buy life insurance to protect your family not as a death bonus – it’s not a game! Mind you that is an awesome idea for a morbid game don’ t you think.
There are Some Instances Where Benefits May be Taxed
Earlier, I said most of the time there will be no tax involved in your benefits from a life insurance. I also said there are some exceptions.
First off, governments across the world are looking at payouts as windfalls. There is no empathy involved with governments which are money grabbing heartless entities. So more and more frequently there are limits on tax-free benefits to your family.
The issue here is that you cannot plan for this as governments change the rule at whim and at least annually. You cannot plan for long term results when the goalposts are continually changing so it becomes a bit of a lottery really.
The wonders of government!
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