SUNDAY, NOVEMBER 25, 2012
In today's world where nothing is certain, life insurance has become a vital financial plan that people should have in place. This is particularly the case if you are the sole breadwinner in your family and want to guarantee their safety long after you are gone. Whether you are starting a new career or accumulating wealth, you should take the step and purchase a life insurance policy to suit your needs.
People who have comprehensive life insurance enjoy many advantages. First, your insurance policy will cushion your family members financially long after you are gone. This ensures that your loved ones continue to live a comfortable, healthy and productive life which they enjoyed when you were alive. Depending on your policy, the insurance company will cover medical cost that you accrued in hospital (accelerated death benefits), cover your burial expenses and ensure that schooling costs are still covered if you have kids. Ensure that you plan appropriately and buy an insurance cover policy that will cater for all your concerns.
Many families are marred with disputes after their breadwinner dies. This is usually the case if he or she dies without leaving a will or distributing properties among members of the family. If you want to avoid such misunderstandings purchase an insurance policy detailing your financial wishes. You can even use an insurance policy to buy out a business partner if you want your assets to stay in the family. Select the right insurance policy and stipulating all your requirements beforehand is imperative in preventing disputes after you are gone.
Term versus Permanent Life Insurance
If you are looking for life insurance there are two major types of cover. They include permanent and term life insurance. To make the correct decision it is advisable that you understand the differences and specific advantages of the two types of insurance policies.
Term Life Insurance
As its name suggests, a term life insurance policy is valid only for a specified duration. For instance, if you buy a policy for 5 or 10 years, and this duration of time has passed and you are still alive then the policy lapses. The main advantage of buying term life insurance is the cost factor, as the rates are much cheaper than with a permanent life insurance cover. This is because of its temporary nature and the fact that you do not have a cash value “savings account”. The premium for term policies also increases over the time period, whereas for permanent it stays the same. If you want to cover an event that expires after sometime (your child's school fees or a mortgage) a term policy is a suitable option that you should consider.
Permanent Life Insurance
Unlike a term policy, permanent life insurance runs until you die. Provided you settle your premiums diligently and in time, the policy will last for your entire life’s duration. The main advantage of a permanent life insurance policy is that your policy does not expire and you have a cash value benefit. This cash savings account is in addition to receiving benefits as well. Even though premiums are higher concerning permanent life insurance, you get some of the money back if you live, this is often more than the premium spent in the first place. The longer the policy has been in place, the higher the cash value. If you are planning for final expenses (debts, burial costs, etc.) a permanent policy is a suitable option.
Life insurance is an essential financial plan that you should have in place regardless of gender, age or wealth. Always research and understand your options clearly before signing the dotted line.
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