Is Life Insurance a Smart Investment?

While life insurance is a must for securing the finances of your family in case of your unexpected demise, is it also a good investment option? Read this post to know how purchasing life insurance is not the best but a wise investment decision.

Generally, when people think about the term “investment”, they assume that they will be required to invest money and receive profits in return. For instance, when you invest in a bank FD, you deposit a certain amount for a fixed duration and earn interest income along with the deposited amount on maturity.

A life insurance policy doesn’t fit this traditional definition of investing. Nevertheless, financial experts still consider it to be one of the wisest investment options. Why is it so? Let us have a look at some of the reasons that make life insurance a smart purchase-

  1. Financial Wellbeing of Family

People invest their money to generate profits. Profits that could help us and our family members to live a more comfortable and financially secure life. But in case of your demise, who will take care of the financial needs of your family?

So, even though life insurance is not an investment product, purchasing it is one of the wisest decisions you will ever make in your life. Finances play an integral role in your life, and in case of your unexpected demise, the death benefit from insurance will at least help your loved ones with their financial needs.

  1. Generating Returns from Life Insurance

If it is the returns you are interested in, there are life insurance plans that offer valuable returns. The policies have a cash value component that you receive if you outlive the policy tenure.

While the returns are not as high as you could expect from equity mutual funds or direct equity investments, it does help life insurance fit into the traditional definition of investments. Not to forget the fact that you also get life coverage and the associated death benefit throughout the policy tenure.

  1. Return of Premium with Term Insurance

Term insurance is the most affordable way to secure your life. But unlike permanent life insurance plans, term plans do not have a cash value. You do not receive anything from your insurer in case if you survive the policy tenure.

However, there are now return of premium or ROP plans where the insurer returns the premiums that you have paid over the years if you survive the policy tenure.

  1. Other Benefits of Life Insurance

Insurance policies now come with a host of additional features. For instance, there are life insurance plans that cover permanent total disability and even terminal illnesses. Some of the plans also offer premium waiver and monthly income benefit if the policyholder has permanent total disability due to an accident or is diagnosed with a terminal illness.

All of these features and benefits further extend the importance of purchasing life insurance and make it a wise purchase against the uncertainties of life.

Do You Think You Should Purchase Life Insurance?

While life insurance is not an investment product, it helps you secure the finances of your family and make sure that their financial needs are taken care of in case of your absence.

Leave a Reply

Your email address will not be published.