A life insurance policy is a contract between an insurance company and an individual where the policyholder pays a premium to the company, in case the person dies, the beneficiaries are paid a lump sum known as death benefit which caters for burial and funeral costs. With the emergent trends and increase in the rate of chronic illness, most people have developed diseases such as cancer, diabetes and hypertension. The treatment and lifelong management of these diseases have been a burden to many families. This policy can help reduce these costs.
There are several types of life insurance including; whole life insurance, Insurance for burial and funerals, credit life insurance, mortgage life insurance etcetera. My focal point is Whole life insurance that offers protection for the rest of your life. A portion of the premium one pays is utilized and generates cash over time. The premium rates are fixed and the rate of the payable amount is also fixed.
Why then should I take this policy? A whole life insurance policy has a constant premium rate that doesn’t change. An important living advantage of this policy is the cash value which accumulates as you contribute your monthly premiums and it grows slowly over the years. This money can be available to you at any point in your life and it is guaranteed to always increase and never go down. There is a provision in which a whole life insurance plan can pay dividends in addition to the assured cash value. A lot of individuals always opt to either use this to pay part of their premiums or even reinvest it in the policies. Finally, life insurance has an advantage when it comes to payment of tax, the death benefit is usually exempt from tax.
There are also some disadvantages in relation to this policy like it has a higher payment of premiums and as compared to term insurance, it has a lower death benefit. This insurance policy often invests the premium of the policyholder where it sees fit. A person with good investment ideas may opt to evaluate the market and invest his cash in a sector that earns the highest benefit. It goes without saying that the benefits related to taking this insurance policy outweigh the risks therefore it is necessary for one to get a life insurance cover and this is dependent on individuals’ abilities and needs.
Prayer Major | wapukhamajor@gmail.com
The writer is a student at Karatina University pursuing a Bachelor of Science degree in nursing. She is also passionate about leadership and media.
