Tuesday, June 23, 2015
Traditional Insurance Policies-- an Overview
Tax benefits, risk cover, fixed income returns, safety benefits are some of the terms which can be used to define the traditional insurance plans. At the early days of insurance, it was difficult for the people to accept this new concept of insurance. The main feature which people used to focus is that they have a minimum risk for the money they invest. These traditional insurance plans are still in usage, this is because even today we find people who wants very low risk of their money.
Defining Traditional Insurance
The characteristic feature of the traditional insurance policy plans are guaranteed bonus and sum assured. The best part of these traditional insurance policies are there are almost no downside probability with a very less risk in the high risk equity. Keeping in mind about the tax planning, people may opt of these plans. The main disadvantage associated with this traditional insurance policies are the user cannot avail any premature withdrawal.
However, one can avail the money back since these policies offer very less amount of sum assured at high premiums. This iswhat the major disadvantage with these policies, i.e., one need to pay high premium amount in order to get higher sum assured. The skeleton of these policies can be simply stated as if the beneficiary of the policy will get the sum assured and the other bonuses, if the insurer dies before the end of the policy term. The sum assured, with additional loyalty and other bonuses are given to the insurer if he or she survives till the end of the plan.
Benefits and LimitationsThe traditional insurance policies serve best in offering the insurer with the benefit of protection at affordable plans, including the protection against various financial storms like retirement, disability or even death. Perhaps, these will provide a temporary solution for the financial needs. The other side of these policies are they cannot meet up the rising costs, cannot offer a solution for the financial issues of aging people. As it is said that a coin has two sides, every policy has both advantages and limitations. One need to choose such a plan that fits to their needs.