Money-Back Life Insurances

Apart from typical life insurances, that only pay out in the form of death benefit, some life policies offer a distinctive approach by having an added investment element. The investment element (also called cash value) means that the policyholder is allowed to increase the price of the premiums paid to the insurance company. This supplementary portion added to the premium, called surplus, is ultimately invested in other businesses, together with other policyholders' added portions. Money-back life insurances belong to this broad category of insurances. They are permanent life policies with cash value. If you want to weld life insurance and investment into one piece, this is an option worth looking at.

In the case of money-back life insurances, the profit that comes out of the investments is issued in the account of the policyholder as a bonus and it is added to the assured sum of money. Considering the fact that sometimes not even specialists can guarantee the success of an investment, for they cannot foresee economic evolution, this type of insurance does not mean you are granted instant profit. This is why money-back insurances are especially advantageous in the long term and they are not a safe option for short periods of time. Despite this, they are more flexible and favourable options than other cash value insurances. For example, compared to endowment policies, that only allow access to the savings account after the completion of the term (after the policyholder's death), Money Back Policy give the option of withdrawing money during the tenure for personal purchases (regarding, for example, home improvements or trips). The policyholder may even sign up to receive the bonuses periodically, thus ensuring a supplementary source of income if there is profit. Furthermore, what makes money-back insurances even more appealing is the fact that the profit is not subject to taxes.

Still, some experts say that there are other more reliable and efficient methods of investing, stating that the cash value component should not be mixed with insurance. This stirs real confusion among potential clients, as they do not know whether it might be better to opt for a normal life insurance and invest the money in other activities. However, if you sign up for money-back life insurance and your policy happens to have some shortfall that you are not able to pay, you can sell the policy with the help of an adviser. Though this is little likely to happen in the long term, keep in mind that selling the policy might entail a complicated and burdensome process.

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