CAPUT58

One of the most powerful aspects of purchasing a life insurance policy is the ability of the insured to create an immediate estate, which is legally valid and recognizable in the court of law. The very act of the insured submitting a signed proposal form with payment of appropriate premiums forms a contract between the insured and the insurer.

The insured has to ensure that all relevant premiums are paid throughout the policy period, either physically by him or from the cash values accumulated by cash dividends or compound reversionary bonus. This will enable the policy to be kept in force and the benefits can be realized at the appropriate time. The sum insured becomes payable upon the insured’s death. Through his contract with the insurer, an immediate estate is created which may form a part of his total estate ie properties and business interests.

In comparison to acquiring property, owning a successful business, having cash savings and other forms of investments, the insured would most likely have to invest his limited time and resources.

To build a net worth of $200,000 would require possibly a lifetime for a majority of the working population. There is, of course, no guarantee of success, as there will be elements of economic of uncertainty, mismanagement, external factors, or timing, which may affect his good intentions. Proper financial planning is also needed to ensure that his investments are yielding increasing or acceptable returns.

On the other hand, purchasing a $200,000 life insurance policy creates an immediate estate of that amount at a fraction of the cost. Besides, most life insurance policies have increasing cash values. Such policies possess a certain asset value in which the insured can exert ownership just as with other personal property or assets permissible by law.

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