Advantages of Life Insurance

Life insurance has no competition from any other business. Many people think that life insurance is an investment or a means of saving. This is not a correct view. When a person saves, the amount of funds available at any time is equal to the amount of money set aside in the past, plus interest. This is so in a fixed deposit in the bank. If the money is invested in buying shares and stocks, there is the risk of the money being lost in the fluctuations of the stock market. Even if there is no loss, the available money at any time is the amount invested plus appreciation. In life insurance, however, the fund available is not the total of the savings already made (premiums paid), but the amount one wished to have at the end of the savings period (which is the next 20 or 30 years). The final fund is secured from the very beginning. One is paying for it over the years, out of the savings. One has to pay for it only as long as one lives or for a lesser period, if so chosen. The assured fund is not affected. There is no other scheme which provides this kind of benefit. Therefore life insurance has no substitute.

This is not similar to a hire purchase scheme. In a hire purchase scheme, the intended purchase is effected immediately, but the price is paid in instalments later. However, in the event of death, the balance instalments are not excused. They have to be paid by the surviving family. In the case of life insurance, the premiums cease on death. There are no outstanding instalments. There is no financial arrangement that can equal the benefits of life Insurance.

A comparison with other forms of savings will show that life insurance has the following advantages.
• In the event of death, the settlement is easy. The heirs can collect the moneys quicker, because of the facility of nomination and assignment. The facility of nomination is now available for some bank accounts, provident fund, etc...
• There is a certain amount of compulsion to go though the plan of savings. In other forms, if one changes the original plan of savings, there is no loss. In insurance, there is a loss.
• Creditors can not claim the life insurance moneys. They can be protected against attachments by courts.
• There are tax benefits, both in income tax and in capital gains.
• Marketability and liquidity are better. A life insurance policy is property and can be transferred or mortgaged. Loans can be raised against the policy.
• It is possible to protect a life insurance policy from being attached by debtors. The beneficiaries interests will remain secure.