There are two major types of insurances which are
- The permanent life insurance
- The term insurance
Permanent Life Insurance - This is a type of insurance policy that covers your entire life. This type of life insurance do have certain advantages which include
- Tax Deferred Growth - For permanent life insurance, you build up the financial value over a long time then you can borrow against it without paying taxes because essentially it is a loan.
- You Don't Lose Your Coverage - As long as you keep praying your premium you don't get to loose you coverage irrespective of how long you've been insured
- Accelerated Benefit - This simply means you do not have to wait till you pass away to gain access to your full benefit from your permanent life insurance.
Term Insurance - This is a type of insurance where you are basically buying insurance for a term. This type of insurance is only active within the period of time at which you have agreed to pay for and does not cover for your entire life. Under this insurance plan all your premium goes to your beneficiary if something happens to you and it does not make provision for a cash value component or an investment component.
Is life insurance a good investment?
According to Dan Lok, If you are someone with basic financial needs who does not have a lot of complicated financial assets to protect then a permanent life insurance probably is not something you need but rather you should consider the term insurance because it protects your family and your loved ones. You shouldn't consider this form of insurance as an investment; it's basically just a way to provide protection for your family if anything happens to you.
However if you have more financial assets, businesses and more complicated assets then a permanent life insurance would be best for you because not only does it provide security for you it also provides financial security for your assets and this would keep you at peace while you work towards your retirement.
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