Long-Term Investmet Strategy - Essay Example

A normal life insurance policy functions as a financial coverage for a person and his/her family in case of the person’s demise. Apart from that, a person can also enjoy a number of other returns, which the person would get after the contract matures. These profits are paid in a structured settlement or slabs (Oviatt 19). Life insurance is an agreement between both an insurer and an insured (insurance contract holder), where the insurer guarantees to pay a selected receiver a sum of cash (the "benefits") upon the passing away of the insured individual.

Relying on the contract, other proceedings such as critical illness or terminal illness might also prompt payment. The contract holder normally pays a premium, either as a lump sum or regularly. Other expenses or costs, for instance funeral expenses, are also, at times, incorporated in the benefits. I raised a family, which always works hard to achieve their goals. This is because I also work hard in life to achieve my goals. After retirement, the main thing I want to do is reward my children plus my wife for the hard work we have put to erect our family.

Knowing that I will be retiring at the age of 60, and my two sons and one daughter all have well paying jobs plus my wife takes pride in taking care of her flower farm, the only thing I can think about is life insurance as a long term investment strategy for my people. I feel that if I will still be alive after my retirement days, then that money will help raise my family appropriately, but if I will be gone, then my wife or children will use that money constructively. I prefer life insurance since I can have a chance to grow that money without using it for a long time.

The benefit to the policy holder is "peace of mind", bearing in mind that the death of the insured individual will not end in financial suffering for lenders and loved ones. It is feasible for life insurance contract payouts to be made so as to aid in supplementing retirement benefits. Nevertheless, it should be vigilantly considered all through the funding and design of the policy itself. Life policy is an official contract of the terms, as well as the conditions of a contract, explaining the limitations and restrictions of the insured party.

Detailed exclusions are frequently written into the policy to restrict the legal responsibility of the insurer (Oviatt 25). They normally have common examples, which are claims associated with fraud, suicide, war, civil commotion and riot. Life insurance has various types of bonuses. The main two, however, include reversionary bonus and terminal bonus. A reversionary (yearly) bonus is rewarded at the end of every year. The yearly bonus might comprise of two parts. The assured bonus is a sum usually expressed as a fiscal sum per ?

1,000 sum assured (Oviatt 25). It is determined at the beginning of the contract and normally cannot be changed. The rest of the yearly bonus will rely on the investment return attained by the money subject to smoothing. The terminal bonus, on the other hand, is paid at the maturity of the policy or, at times, at the surrender of the contract. It is, at times, referred to as the concluding bonus. The terminal bonus stands for the insured’s entitlement to an amount of the fund, which has been held back for the aim of smoothing.

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