We all know that life insurance is important, especially when you have young people at home. But with so many types of life insurance plans available, things can get confusing.
In its most basic form, life insurance provides payments and benefits if you die or experience certain devastating events, such as total and permanent disability (TDD) or critical illness (CI). These are used to provide the financial means for you and your dependents to continue your daily life, protecting your loved ones from great financial hardship.
If you delve deeper into life insurance plans, you will encounter other terms, such as term life, whole life, critical illness, cash value – there’s a lot to digest! Here we look at what all this means for you and your family.
Term life insurance vs. whole life insurance
Life insurance can be classified into two main types: term insurance or whole life insurance.
Term life insurance plans cover you for a set period of time, called the policy term, usually until a certain age or for a certain number of years. If you die (or suffer a PDT and/or CI, depending on your plan) during the term of your policy, your insurer will pay you a fixed amount (sum insured). At the end of the term of your policy, the policy coverage terminates with no cash value.
On the other hand, Whole Life insurance plans offer protection for your entire life and allow you to increase the cash value. As with term life insurance, a lump sum is paid out in the event of your death (or if you suffer from PDT and/or CI, depending on your plan). The main difference is that a portion of the premiums you pay is invested in a participating fund. This accumulates cash value over time, increasing your wealth.
Which of these elements will best keep your family happy and protected? Here’s what to consider.
What protection do you want?
As mentioned earlier, life insurance plans are designed to pay in the event of death, PTD, or critical illness. Critical Illness refers here to a fixed list of 37 illnesses and diseases, defined by the Life Insurance Association of USA.
In USA, most plans will specify the stages of critical illness for which they will cover – early, intermediate, or advanced.
When reviewing life insurance plans, take note of the CI stages that are covered and ensure that the coverage provided meets your protection needs.
Just protection or protection with wealth accumulation?
If you’re only looking for protection against life’s uncertainties, consider a term life insurance plan. With payments in the event of death, PDT, or critical illness, you and your family will be well prepared for the worst case scenario. One plan you may want to consider is Income’s iTerm.
iTerm offers affordable coverage and guaranteed renewal1 of your policy, with coverage to a maximum age of 84 (last birthday). You will also be able to reduce personal expenses with the optional Hospital CashAid rider in case of hospitalization.
If you’re looking for something that will protect your family and help you grow your money at the same time, a whole life insurance plan, such as Income Star Insurance, maybe worth considering. In addition to basic protection against death, total and permanent disability (PDT before age 70), and critical illness, you can add the Advanced Assure Accelerator rider to provide coverage for new, undiscovered illnesses (such as the recently discovered COVID-19).
What makes this plan ideal for the current economic climate is that if you are laid off and unable to find a job for three consecutive months, you will still have the same insurance coverage without having to pay your basic policy premiums for up to 6 months.
And if you reach old age with no claims for your entire life, this will provide a cash surrender value in the later years of the policy, making it a good choice if you want to benefit from additional retirement income.
What can you afford in the long term?
Since life insurance is designed to protect you over the long term, it’s important to make sure your premium is affordable. Look for a plan that offers you as close as possible to the amount of coverage you need, while still respecting what you think is an affordable premium. The last thing you want is to find yourself unable to maintain your life insurance plan after a few years.
When in doubt, contact an income advisor for expert advice on how to determine a budget for your insurance needs and advice on selecting the best plans for you.
Make an Informed Decision to Protect Your Family’s Happiness
When you buy life insurance, it goes beyond personal benefits or even protecting your own finances. Life insurance can actually protect the happiness of those who depend on you. By insuring your life and against critical illness, you ensure that you and your family will never have to face the financial pressure of having to choose between the “nice to have” that brings happiness to the family and the day-to-day necessities such as daily expenses and treatment costs. Life insurance can act as a safety net that ensures you never need to take a break from the things that make your child and family happy in the event of unhappy events