Insurance policy may not be on your card for saving and budgeting for an emergency fund, but when it comes to how your money and future are managed, insurance is it, particularly life insurance.
Financial planners advise that even with all its imperfections, the benefits as an investment portfolio significantly place it ahead of others.
Permanent life insurance, they insist, is the best form of savings that guarantees the future in life or death better than bank savings.
First, the argument is that there are some life insurance policy products that say, if one insures his life with a certain amount, after some years the policy holder can claim a certain amount in excess of premium paid, depending on the terms.
Besides, life insurance encourages a strong savings culture since the policy holder does not cash out the money across the counter.
If you save money with a bank in the morning, you can withdraw it in the afternoon. But if you insure your life in the morning, you cannot terminate it as soon as you can a bank savings, otherwise you may lose it.
Nobody wants to lose his investment.
But beyond this consideration, there are several privileges in a life policy which make it better than a savings account in the bank.
The Managing Director and Chief Executive Officer, of Multiple Bond Trust Insurance Brokers, Abiodun Durodola, disclosed some of these privileges in an interview with TheNiche.
He explained that a life insurance policy holder can take a bank loan against his policy, using the policy document as collateral.
He allayed the fear of default in premium and possible forfeiture, saying with a non-forfeiture clause in it, a policy holder can still recover his money whenever he wishes even after he cannot continue.
“If you have a non-forfeiture clause in it, the fact that you don’t pay premium for a period of time does not mean you have forfeited it. You can evoke the revival clause to retrieve your money any day you wish. In that case, you can decide on the surrender value and cash out,” Durodola said.
There is also the paid up policy, in which case the policy holder pays ahead of agreed tenure and leaves the money there as long as he wants before returning to claim it. Besides, there are policies crafted to take care of school fees for the holder’s children in case the man is incapacitated and cannot earn money again.
Durodola added: “Insurance is possible for anything. Even for the man who knows he is going to die, there is insurance for him. If he brings his life for insurance, the company will design appropriate policy for him. The company will not say no. Rejection is the last thing.
“The underwriter can give him cover if he can pay the agreed amount the company considers good enough to under write. It is based upon the subject matter and the thing he is insuring against. You have to look at the two sides.
“The most important thing is to earn some money reasonable enough to part with the huge amount the policy holder desires in future.”
There is also burial expenses insurance. Even for a policy holder who does not have a relation as next of kin, the state government administrator general and public trustee (AG & PT) can be the beneficiary to the policy holder.
The AG & PT department in the state judiciary will oversee the deceased policy holder’s estate and burial. This office also settles issues relating to an estate of one who dies intestate.