1759 was the year when the first life insurance concept was mooted and it was created by the Corporation for Relief of Poor and Distressed Widows and Children of Presbyterian Ministers. However such insurance policies were made available to all only in the early 19th century and were received with apprehension. At that period only forty percent of the insurance companies were said to have survived. Though there was continuous change in insurance laws to improve the survival of these companies and gradually the insurance concepts evolved to mutual life funds and term life insurance policies, the traditional life insurance continues to remain a thriving reference model to this day.
Ask any insurance company and they would top the list of benefits of their products with ‘peace of mind’. Renewals are at times burdensome especially when you chose a high premium. For those that do not have regular income they may chose onetime payment with no renewals and you are covered until you die. Talking of insurance premiums they are level and whatever you choose at the time of purchase of the insurance product that is the amount you will pay forever. In such as case your nominee will get the full benefit amount of the policy which is tax-free and irrespective of when you die. Other than this benefit the full life insurance policies double up as money savings too as you can borrow against the cash value of your loan with the disadvantage of decrease in the overall value of the policy. You may avoid this reduction in overall value if you choose to pay back the sum that you took as a loan.
Unavoidable downside of traditional policy
The only downside that is unavoidable of the original life insurance is that it is quite inflexible and to overcome this feature the insurance companies came with term life insurance. The modification included periods of time, like say in multiples of 5 or 10 years making the coverage effective. This automatically made the premiums on term life insurance policies more affordable and offered competitive payouts at the time of death. This turned the product more attractive especially to couples with huge financial commitments.
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