Advantages & Disadvantages of Life Insurance in Uganda

Life insurance offers several advantages not available from any other financial instrument; yet it also has disadvantages.

Advantages of Life Insurance 

 Life insurance provides an infusion of cash for dealing with the adverse financial consequences of the insured’s death.


Life insurance enjoys favorable tax treatment unlike any other financial instrument.

• Death benefits are generally income-tax-free to the beneficiary. 
• Death benefits may be estate-tax free if the policy is owned properly. 
• Cash values grow tax deferred during the insured’s lifetime. 
• Cash value withdrawals are treated on a first-in-first-out (FIFO) basis, therefore cash value withdrawals up to the total premiums paid are generally income-tax free. 
•  Policy loans are income tax free. 
• A life insurance policy may be exchanged for another life insurance policy (or for an annuity) without incurring current taxation. 

Note: All of the above statements are generally true; however the tax benefits of life insurance have certain limitations which under the wrong set of circumstances can cause the tax benefits mentioned to be lost. Please discuss with your insurance and tax advisor.

 - See more at: http://www.insurancespectator.com/advantages-disadvantages-of-life-insurance-in-uganda