Life insurance refers to the protective cover on the life of the
individual insured and provision of financial benefits in case of loss
of life of that individual within a certain period. This policy is a
mixed blessing.
So a comparison of benefits and disadvantages accrued is made in the following discussion.
Advantages
Some of the various benefits of insurance policy are listed below:
1. Mental peace
The most important benefit of life insurance is that it assures mental peace. When a person goes for life insurance, he and his family are relieved from worries of future. Thus, it ensures mental peace.
2. Financial Security
The policy of life insurance provides economical security to the family of the policy holder in case of death of the breadwinner. On occurrence of this unfortunate event, the family is forced with a cash crunch. But by availing a life insurance policy, this problem of cash crunch is solved by a lump sum amount paid by the insurer.
3. Loan in case of need
There are circumstances in life when the individual needs funds but is unable to get from various sources. The life insurance policy also provides a solution to this problem as loan can be taken against the policy and need not be repaid as the loan amount is deducted from the police value on maturity.
4. Cover for whole life
The life insurance policy provides coverage for the whole life of the policyholder. It also provides protection in cases of serious illness.
5. Tax-free source of savings
In addition it is a source of savings which is completely tax-free
6. Source of mitigating certain liabilities
The life insurance policy provides a great source to satisfy certain needs and liabilities like loans and mortgages.
7. Maintenance of living standard
The life insurance policy helps in maintaining the living standard of the family even after the death of the breadwinner by providing financial benefits to the family.
8. Enhanced coverage
The policy provides enhanced coverage by providing for medical benefits.
Disadvantages
The disadvantages of life insurance are as follows:
1. Expensive
The life insurance can prove to be a costly affair, particularly when suffering from illness and regarded by insurers as High Risk due to some reasons like old age etc.
2. Irrelevant in case of no-family person
The life insurance policy is irrelevant for an individual who is not having any family or dependents
3. Increasing premiums
The premium payable increases with the increase in age. But the income gradually decreases which makes it difficult to strike a balance.
4. No benefit in case of long life
Some policies do not provide any cash benefit on the policy holder surviving the policy term. In that case, amount paid for premiums is wasted.
From the above discussion, it becomes clear that though life insurance is a mixed blessing, yet its advantages outweigh its disadvantages. But at the same time, it depends on the requirements of the individual.
.
So a comparison of benefits and disadvantages accrued is made in the following discussion.
Advantages
Some of the various benefits of insurance policy are listed below:
1. Mental peace
The most important benefit of life insurance is that it assures mental peace. When a person goes for life insurance, he and his family are relieved from worries of future. Thus, it ensures mental peace.
2. Financial Security
The policy of life insurance provides economical security to the family of the policy holder in case of death of the breadwinner. On occurrence of this unfortunate event, the family is forced with a cash crunch. But by availing a life insurance policy, this problem of cash crunch is solved by a lump sum amount paid by the insurer.
3. Loan in case of need
There are circumstances in life when the individual needs funds but is unable to get from various sources. The life insurance policy also provides a solution to this problem as loan can be taken against the policy and need not be repaid as the loan amount is deducted from the police value on maturity.
4. Cover for whole life
The life insurance policy provides coverage for the whole life of the policyholder. It also provides protection in cases of serious illness.
5. Tax-free source of savings
In addition it is a source of savings which is completely tax-free
6. Source of mitigating certain liabilities
The life insurance policy provides a great source to satisfy certain needs and liabilities like loans and mortgages.
7. Maintenance of living standard
The life insurance policy helps in maintaining the living standard of the family even after the death of the breadwinner by providing financial benefits to the family.
8. Enhanced coverage
The policy provides enhanced coverage by providing for medical benefits.
Disadvantages
The disadvantages of life insurance are as follows:
1. Expensive
The life insurance can prove to be a costly affair, particularly when suffering from illness and regarded by insurers as High Risk due to some reasons like old age etc.
2. Irrelevant in case of no-family person
The life insurance policy is irrelevant for an individual who is not having any family or dependents
3. Increasing premiums
The premium payable increases with the increase in age. But the income gradually decreases which makes it difficult to strike a balance.
4. No benefit in case of long life
Some policies do not provide any cash benefit on the policy holder surviving the policy term. In that case, amount paid for premiums is wasted.
From the above discussion, it becomes clear that though life insurance is a mixed blessing, yet its advantages outweigh its disadvantages. But at the same time, it depends on the requirements of the individual.
.
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