Term Life Insurance – Buy Term and Invest the Difference!
The phrase “BUY TERM AND INVEST THE DIFFERENCE” evolves around the term life policy concept, which is a basic protection policy and the endowment/whole life policy that has protection and investment/savings features. Simply put, the phrase means that instead of taking the endowment/whole life policy, a person should buy a term policy for protection and the difference between the premiums of the two policies should be invested by the person himself to earn something. dividend on investment.
To agree with the phrase “Buy Term and Invest the Difference”, it is necessary to have the conviction and willpower to invest the premium difference in an investment vehicle that can pay a higher return than that declared by a insurance company. Unfortunately, most of us do not have the ability to achieve the desired performance over time. Sometimes one is lucky to get a good performance from the stock market but this is all short lived when the recession hits all the gains will be wiped out and you may even suffer heavy losses.
However, investment-linked life insurance has been pioneered and offered for sale by insurance companies around the world as a way in which it is possible to have protection and investment at the same time. In the United States of America, investment-linked life insurance is known as “variable life insurance.” It was started by the Equitable Life Assurance Society and was released for sale in 1976. This type of product is recommended if one agrees with the phrase “Buy forward and invest the difference.”
Investment-linked life insurance policies offer more flexibility to policy owners and they can choose when to top up or how much, or how much of their policy is directly tied to investment performance. Given the wide range of investment tools available, investment-linked insurance products may be linked to stocks and shares, property or real estate, cash deposits, fixed income securities, government bonds, corporate bonds, funds Mutual Funds, Mutual Funds, Other Life Insurance, and Annuities Investment-linked funds have been created to accommodate a client’s various investment objectives, risk-reward profiles, and investment preferences.
With several insurers offering a variety of investment-linked insurance products, it is now possible for an insurance policyholder to enjoy protection while only investing in one fund or a combination of funds, subject to certain limitations, such as a minimum of 20% of your investment in each selected fund. An insurance policy holder can switch his investment between funds when his investment objectives change.
As an example, an Income Fund managed by a fixed income investment team belonging to a company made up of people with more than 20 years of experience in the financial sector. This fund is suitable for policyholders seeking principal stability and a higher return compared to bank deposits, but with an acceptable risk for the invested capital. The fund is invested primarily in fixed income securities, treasury products, money market instruments, collective investment schemes and any other permitted instruments or investments prescribed by relevant regulatory bodies to provide consistent returns to policyholders through accumulation long-term capital. -finished.
Without the existence of investment-linked products, one may not agree with the phrase and cannot “buy the term and invest the difference” but instead purchase a traditional participatory life insurance product that provides life protection with an element investment. The premium may be higher, but it leads to wealth creation for the future.