Money & Business

What are the pros and cons of a life insurance policy?

For people with financial responsibility, life insurance will always be a smart decision to take. Breadwinners or individuals that support family can expect a return of investment for most cases. Here are the pros and cons of picking up a life insurance policy, whether it’s worth the budgeting or not.


The biggest advantage of a life insurance is the lump sum that your beneficiaries will receive upon your death. This ensures that they remain financially stable after the death of a provider. The sum can assist in covering their needs, from food/shelter to education/luxuries, guaranteeing they continue to live a comfortable life. Investing can give a higher return for you money but these take time to mature, a life insurance company gives more during an untimely death.

Deciding on a policy might be a daunting task because of the multitude of options, however, insurance companies have made the process easier with ready-made choices and customer support. You will be amply educated on the insurance policy you’re about to take and guided throughout the process. With the availability of personal insurance agents, you can be certain that queries and clarifications you’ll need will be answered.

Lastly, a life insurance plan can be an all-around financial investment for retirement. Depending on the kind of policy you take, the sum you will be able to use once the policy matures can be enough to have a stable pension. If ever you don’t take one that gives you freedom to use besides death, it’s still a lump sum that can be considered inheritance to your beneficiaries.


Premiums (the amount you pay periodically for a plan) is a huge financial responsibility. The life insurance policy you get is entirely dependent on the amount you pay. Insurance companies give options that cater to a variety of budgets but premiums are still a considerable amount some might not be able to afford.

The cost of premiums also increase depending on the policyholder’s health and age. The higher the chance of a policyholder’s untimely death, the more premiums they have to pay for the insurance companies to balance the risk. It is best to start at an early age, but most don’t earn enough to afford a life insurance policy early on in their careers.

Life insurance policies that give dividend options is a weak investment vehicle, you are better off investing in a business or index fund if you want to enjoy the income from your money. Life insurance is primarily made to benefit beneficiaries and not the policy holders.

Insurance companies still need to make a profit and thus value more individuals to be insured. Their priority is to convince you to take up a policy. It is still best to research and be informed on your own so you will not be carried away with big promises and returns. The best policy is the one you trust and are informed in.


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