A thoughtful person, in planning his life, will calculate various life scenarios, including a negative one. As you remember the famous character of Mikhail Bulgakov’s "Master and Margarita" novel Mikhail Berlioz planned to rest on mineral waters, and got under the tram instead. So, unfortunately, there are events that can happen, and which we cannot control. But we can provide the possibility of their occurrence and take protective measures, that is, to insure ourselves. Thus, by fastening the seat belt, we do not plan to get into an accident; we just insure ourselves and our family from possible problems. The life insurance policy performs the same function in planning the life of our family.
The universal life insurance policy is a kind of money box, which a person makes regular contributions in. If suddenly an accident occurs with the owner of the policy, his relatives will receive a large payment on insurance without delay. So the insurance policy brings back the income lost with the death of the breadwinner to the family. This is the money that the insured would have been earning and bringing home for decades, if he remained alive. And even if the insured person passes away, his family will still have the means to live. This is the protective function of the insurance policy for universal life insurance.
On the other hand, the probability of a young, healthy person passing is very small. Then the insurance policy will work for the family breadwinner on its second function, as a conservative savings plan, accumulating and increasing the fees that he makes in accordance with the one-off term policy. At a certain point, the policyholder will complete his insurance policy, and the funds accumulated under the insurance program terms will form his accumulated pension capital.
According to statistics, people who have a universal life insurance policy live longer as they are less worried about the money and financial well-being of their families.
How profitable is the life insurance policy from a financial viewpoint?
People are often inclined to oppose life insurance to other financial instruments by comparing them on a number of parameters, for example, profitability. And they do it, consciously or unconsciously "forgetting" that among all financial instruments, only the universal life insurance policy has the ability of making a large payment upon the person’s death. This is what ensures the financial security of the family. In this case, all other properties of this financial instrument, for example, its profitability, become secondary.
If a person chooses a financial instrument only from the point of view of profitability, life insurance will definitely not suit him. However, in the pursuit of profit, one should not forget that after a sudden passing, if no additional financial reserves are formed, the family will be scarce of money for many years. Will it be right and moral in relation to your loved ones? Only by providing financial protection to your family and your relatives, you can look for more profitable investments, but not before.
For many years, ensuring the safety of the family, the universal life insurance policy creates a pension capital, accumulating the premiums made.
There are many situations when the universal life insurance policy use is appropriate. Here are just a few of them:
- The universal life insurance policy is a personal bank. It is possible using the money accumulated in the insurance without terminating the insurance contract;
- The universal life insurance policy is a means of the equalization in the inheritance of children. How to divide it, if parents left one apartment for children? This can be a difficult task, and if it is not solved, a conflict between children is possible. The life insurance policy of a parent on the cost of the apartment solves the problem: one child gets the apartment, and the second obtains an insurance payment the size of the apartment cost. And there is no ground for conflict;
- The universal life insurance policy can be turned into annuity, a lifetime income stream. And then a person can be sure: no matter how long he lives, the money will never end. Being confident that they will be provided for life is very important for elderly people, as the fear of surviving your money is one of the main fears in our time of retirement;
- The universal life insurance policy is a way of multiplying the inheritance. Often, grandparents accumulate savings for their grandchildren. Most often it is cash or money in bank accounts. But if they invest these savings in the insurance policy, it will significantly increase the inheritance that they leave to their grandchildren;
- Dozens of other cases, when people use universal life insurance policies in their own interests. Life insurance is necessary for people from the cradle to old age.
The most important purpose of the universal life insurance policy is to guarantee the family the capital necessary for life whatever scenario is. Once a person signs a universal life insurance policy, he instantly ensures the safety of his family for decades or for life.
A well-known pre-revolutionary propagandist of life insurance V. Podgaetsky in his lecture on life insurance in 1910 wrote: "The purpose of the insured is not a gain, but the fulfillment of the conscience duty. Life insurance is not a commercial undertaking full of risks and dangers, but deeply moral matter based on precise mathematical calculation and on death rate laws, it is a providing your own old age and the future of your loved ones from the very first day of insurance".
Photos per websites: lifeinsuranceinuk.co.uk, hoytinsuranceagencyct.com