Your insurance policy is not a jackpot

On Christmas eve I was having a chat with Frank over a cup of coffee, it was during the conversation that I decided to make this post. Frank told me he just bought a life insurance policy that he hoped to use as a retirement fund. All this while I have believed he is well informed as it relates to the benefits and the purpose of an insurance policy. I tried as much as I could to give him a proper perspective of the place of insurance in ones financial well being.

"If you need insurance buy insurance, but if its investment you want buy investment" Says Suze Orman an internationally known financial advisor. For definition  of  insurance policy go here.

What could an insurance policy do for you?

1. An insurance policy could protect your investment from total collapse. For example if you own a factory with an insurance cover, and incidentally the factory is gut with fire. The insurance company pays you a form of compensation that could enable you rebuild the factory.

2. The claim from an insurance policy could be used to cater for your dependents on your demise. Which may include you wife, children (biological or adopted) and loved ones.

3. An insurance policy could give the policy holder peace of mind to better concentrate on task, career and life in general and becomes a positive stimulus to your activities and allows you to get on with your own business in the knowledge that your dependents are financially protected

 You can see from the fore going that a policy is useful to a very large extent only when you have something going for you that needs to be protected against unforeseen loss or damage. If you require a retirement fund or investment you can put your money in bonds, shares, IRA, Annuity or better still start your own business.