Life Insurance Protects Your Loved Ones  

What is life insurance?

Life insurance is a form of protection that gives you cash payout in case of death or permanent disability. An insurance policy is a contract between you and the insurance company for the premiums you pay in return for the protection they provide. Generally, life insurance centres around term life or whole life.

Term life insurance, as the name suggests, covers you for a fixed term and pays out the sum insured in the event of death or permanent disability. On the other hand, the whole life insurance covers you for the full term, for example, 30 years, and pays out upon maturity.

What should you consider when choosing a plan?

As there are plenty of insurance companies offering various plans, you need to determine what your needs are to purchase a policy that is right for you and your family with insurance premiums that you can afford. A life insurance consultant would be able to help you find the best policy, so don’t hesitate to speak to one.

Among the key considerations to find the policy that fits you best are your age, your health condition, your family members and whether you are self-employed or otherwise. This is important to gauge your financial liabilities and how these debts can be paid off by insurance in the event of your death.

If you’re still young, your life goals will matter too in selecting the best policy. For example, if you plan to have children or if you plan to retire early, these goals will help you decide how much life insurance you should take.

Those who are still planning to buy a life insurance policy must take note that the longer they wait to buy it, the more expensive it typically gets. It’s best to start early so that you don’t have to pay high premiums. Those who are covered with life insurance through their employers, need to be mindful that the coverage may be basic and not sufficient to help their beneficiaries lead comfortable lives.

Insurance with a purpose

In addition to covering death and disabilities, life insurance can also be purchased for savings, retirement or investment purposes. Understanding that a term life insurance might not offer you the additional protection you may seek, there are options to withdraw the money from the whole life policy which can double as an investment-linked savings account.

Those who want their insurance to do more, can opt for investment-linked policies that not only cover death and permanent disabilities, but also help generate potential extra income from investments.

Anyone can sign-up for more than one insurance policy and that’s why many people also have health insurance to manage possible health issues as they age. Critical illness plans are also fast gaining popularity as people seek protection from rapidly growing illnesses and diseases.

Get familiarised with insurance jargons

When deciding on insurance plans, you will come across some common jargons which will help you understand life insurance better. They include:

• Policy: the document detailing the terms and conditions applicable for the insurance contract as issued by the insurer for the insured
• Policyholder: another term for the insured, or the owner of the policy.
• Premiums: the monthly or yearly payments you need to make to the insurance company to keep the policy valid, and keep you insured
• Claim: a formal request to your insurance company to get the payout
• Death Benefit: the payout, or cash given out in the event of death
• Beneficiaries: those named to get the payout, typically your spouse or children, or anyone else you have named

Seek good advice before you decide

Speak to an insurance consultant who will listen to your needs, and advise you on a plan that meets your requirements, according to your budget. As buying a life insurance policy is a long-term commitment, choose wisely for a plan that you can afford. Pay your premiums on time and consistently to ensure that your policy does not lapse. A lapsed policy means all benefits promised to the policyholder are terminated.

Many insurance companies also offer free online quotations for potential customers. Alternatively, you can also check your coverage sum and premium payments through insurance companies’ online calculators. This can help you get a clearer picture of how much you will need to allocate for your coverage for that peace of mind.