Six Uses of Life Insurance in the Philippines | EfPrime Finance
Six Uses of Life Insurance in the Philippines | EfPrime Finance
One. Keyman insurance.
It is a
type of insurance that provides a firm with financial protection against the
loss of earnings due to the death or disability of a key employee. It also
secures the services of a person who takes the place of a key person. It
increases the probability of success of the business to survive in a long
period of time.
Two. Life insurance may also be pledged as collateral.
Life
insurance policies can also be pledged as a collateral.
Three. Business continuation.
A
partnership or a closed corporation is a type of business that has certain
problems that are important to the surviving owners and employees.
Upon
the death of a general partner, the business is dissolved. Its surviving
partners are responsible for the day-to-day running of the company.
A buy-and-sell
agreement is an arrangement that enables surviving partners to liquidate their
businesses without causing them to liquidate themselves.
In this
way, the partnership will be able to continue operating and the insurance
policies will be paid out to the surviving partner.
Four. Mortgage redemption.
In most
cases, the head of the family will obtain a home mortgage loan that will be
paid in 20 years.
Since
the death of the family's head may put their home in danger of foreclosure, it
is better to obtain life insurance to prevent this from happening.
Five. Protection against forced liquidation of property: estate conservation.
The
proceeds of life insurance can also be used to settle debts owed at the time of
death.
Life insurance is a great medium to provide liquidity to an estate. It automatically produces the funds necessary to pay taxes.
Six. Estate creation.
One of
the most important feature of life insurance is immediate estate creation.
This feature allows the policy owner to immediately create the full amount of
the death estate.
A death estate with a value of over PhP1,000,000.00 can be created by paying the first premium.
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The Author is advising readers to consult with your respective Financial Advisors before venturing in any investments. Investing your money is dependent to your goals and your risk tolerance. You should know the risks and rewards of investing before you actually do the same. The illustrations above are for educational purposes only and any risks or losses that you may incur are imputable to your respective decisions.
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