Although there is no doubt that life insurance can give financial security to the policyholder himself and to his immediate family, it can’t be denied that there are still a number of pros and cons life insurance. Let us now take a detailed look into some of these.
What are the Pros?
Aside from the financial security that it can give to a policy holder’s family after the sudden demise of the policy holder, another advantage of life insurance is that it gives the policy holder a certain level of peace of mind concerning the future of his family after his death. The policyholder will have nothing to worry about or fear that his loved ones will have nothing to back them up financially in case of sudden death.
Most often people are not aware that life insurance can also be used to settle debts.
How?
If the policy holder couldn’t find any other means that can help him settle his debts, he may offer his creditor his insurance instead. Consequently, the creditor will cease from further harassing the policy holder. After the entire creditor is assured that he is going to get paid a good sum if something happens to the insurance policy holder.
What are the Cons?
Life insurance is indeed expensive for many people, and this is a major drawback that this kind of insurance has. It is very expensive that the policy holder needs to work extra hard or find another resource of income just to be able to produce the needed amount of money for the monthly premium. There are also instances that an average American who decided to take the risk of availing a life insurance would run the risk of ruining his monthly budget all because he need to have enough funds to cover for the monthly premiums.
Studies have also indicated that it is not just the cost of life insurance that the policy holder will have to deal with. It was found out that when a person decided to avail for himself a life insurance, people have a great tendency to become careless. This may be due to the notion that since the policy holder’s family will be secure financially in the event of his sudden death, thus some of these policy holder’s are using the life insurance as their license to become reckless and carefree at times. But it is important for this policy holder’s to know and understand as early as possible that if it is only upon natural causes of death that their designated beneficiaries shall be able to receive the insurance payout. Meaning to say, if the insurance company investigated the nature of the death of the policy holder and found out that he took deadly risks over his life that can be automatically used as a ground for rescission or revocation of the said insurance policy.
Another point of concern about life insurance is that it may drive some people to defy morality. One typical scenario, which has also been used so many times as a movie plot, is where the beneficiary would kill the insured person. Thus upon the insured person’s death, the beneficiary can immediately claim the insurance benefits and payout.
Lastly, not all insurance companies are willing to award insurance benefits to the designated beneficiaries right away especially if the proceeds are worth millions of dollars. They may assert material misrepresentations on the part of the policy holder or similar analogous ground just to prove that the insured person or even his beneficiaries are not at all entitled to receive the said payout amount. In the end the beneficiaries themselves may have to face a number of court battles with little chance of hope to get their hands on the millions worth of proceeds.
These are some of the most notable pros and cons of life insurance. It is up to you to judge whether life insurance is indeed worth taking the risk or not.