What is Life Insurance?
What is its purpose?
Sometimes, bad things happen when we least expect it to. Everyday, people face risks like premature death, disability or severe illness, that often comes with serious financial consequences. Life Insurance makes it possible to mitigate these consequences. Policies (insurance agreements) are designed such that when the unexpected strikes, the insurance company provides financial assistance to cushion the impact of the event.
WE CALL THESE EVENTS.
Not all events are created equal.
Life insurance does not cover all events.
Typically only events of serious financial consequences will be insurable. (This rules out the common cold, unfortunately). We discuss the different events that can be covered under insurance in Section Two.
Life Insurance also helps you to save or invest.
Other than providing cover, life policies also enable people to save or invest.
The main difference between saving & investment lies in the degree of risk involved.
Savings tend to be associated with lower risk (and potentially lower return), whereas investments tend to have higher risk (and potentially higher return).
Next... We learn about TYPES OF COVER.