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What Is Life Insurance and is it an Asset? Life insurance can often be viewed as an asset because you seek to benefit from the accumulated value of life insurance premiums. An asset is something that has value and/or marketability that an entity, individual, or institution possesses with the hope that it will give a higher future financial return. Some typical assets are cash, gold, real estate, automobiles, and even bank accounts. Assets are liabilities for another party. Life insurance is one way to protect future financial security. There are egg-insurance.com that life insurance is considered an asset. Many people see the benefit of having an asset that will give a higher return in the future and maintain a level of stability for their family and loved ones. Many times, people purchase insurance policies that will cover the majority of their living expenses until they die. Others opt to utilize the policy as a source of income in case of death or disability. Regardless of the reason, most people agree that having life insurance is extremely important. The reason why insurance is considered an asset is two-fold. First, insurance policies are a source of steady income that pays out regardless of the health of an applicant. It is also a tax break for seniors that are alive in the United States. Each year, many governmental benefits are awarded to individuals who are in need of long-term income support. These benefits are often in the form of a tax deferral, guaranteed interest, and Social Security Disability Insurance (SSDI). In terms of cost, both term and whole life insurance policies are expensive. This is especially true for younger people. In infinity auto insurance tucson to protect themselves, younger individuals frequently utilize the option of taking out a policy loan. Policy loans are essentially a way for the insurance provider to raise the amount that they will pay out if a policy holder dies. Although this type of loan is technically not considered an asset, it is still very valuable to a company. Another question that is frequently asked is whether or not whole life insurance policies are considered an asset or liability. Basically, all policies are assets in that they provide a guaranteed stream of income (provided the policyholder is alive) or coverage on a major claim of loss (provided the policyholder has money left over to cover that claim). Whole life insurance policies are also liabilities in that they require premium payments that must be paid in order to access the benefits. For this reason, they are often less affordable than other forms of insurance. Another issue frequently brought up is whether or not permanent or variable universal life (or simply, universal) insurance is an asset or liability. This question is similar to the one above, with one exception – if a policy holder is still alive when the policy matures, then it becomes an asset. Essentially, it continues to provide a source of income even after the death of the policyholder. However, the premium paid and the benefit provided will change, depending on the individual characteristics of the policy. Universal life insurance is a type of permanent life insurance. It is a nonqualified life insurance policy that provides coverage for the policyholder's dependents. This differs from a qualified policy in that the premium payments remain the same throughout the term of the policy. If the insured dies during the term of the policy, then the proceeds from the premiums are paid directly to the named beneficiaries. egg-insurance.com can take the form of a lump sum or various payments are periodically made to the beneficiaries. If the insured is still alive after the policy expires, then the excess premium payments are distributed to the other named survivors. Term life insurance policies are generally less expensive to purchase and maintain than universal or whole policies. The policy owner is able to choose between a cash value and a value based on a predetermined selection process. A predetermined amount is invested by the insurer and this portion is used as the portion that is used to determine the cash value of the policy. This portion is subject to the investment rules of the plan itself. A cash value policy essentially gives the insured the option to invest the accumulated value of the policy in a variety of investments, thereby increasing the value of the accrued savings, rather than the current value.