Financial risk of dying early is a phase of stress for almost everyone. Ensuring a payout for family members who might otherwise be left in economic turmoil is now possible by investing in life insurance policies. These days, life insurance policies offer a combination of features from the entire world of investment, because generally these come with a blend of traditional insurance features and attributes of a mutual fund account as well.
These days, there exist various modes for investing in Life Insurance policies. Earlier it was a simple phenomenon of investing an amount for a particular period of time and using it for a specific purpose. But now it comes with many amendments and lures.
Cash value insurance policies are one of the most preferred life insurance policies, in which the premium or fees that is to be paid initially is a comparatively larger amount. Out of this premium, some amount that is in excess is invested in a separate account, either by the insurer or in an account personally managed by the policy holder. This way, chances of building up cash value are a bit high.
The upcoming gains of these policies can be used in several ways; like for increasing the death benefits. With this amount, the policy could be kept in effect even when the monthly premiums are no more paid. The only drawback of these policies offering a large number of investment features is that these comes up with complex terms and conditions and are offered by salespeople who tend to earn a significant commission off your initial premium.
There are variable life insurance policies also in the market, but in these the cash value and benefits vary depending upon the performance of your investments. The benefits may actually decrease or go away completely as well. Therefore it is important to have a deep study about the investments you are planning to invest in and this can be done easily by the prospectus available by the companies online.
Life insurance policies also offer you with great Tax Benefits. In fact, these Tax benefits are the most important among the advantages of a variable universal life insurance policy. The earnings that are invested annually for the life insurance are not taxed and on the other side, the taxable gains on policies that can be cashed out later can be reduced by the amount of insurance protection provided by the plan. On the death of the policy holder, the gains are not usually taxed.
There also exist pure investments accounts like IRAs, Roth IRAs and 401k plans that offer similar tax benefits and thus are the recommendable choice for many financial advisers. Other than these, stocks bonds, international mutual funds, money market accounts and balanced mutual funds are other investment options that are offered by insurance policies.
It is always beneficial to purchase a variable universal life insurance policy directly from the company and not from the salesperson. This way you can save the cost that is charged by him.