Nobody is certain what will happen tomorrow, therefore protecting your family should anything happen to you is very important to anyone with dependants. Taking a life insurance policy is one good way to do this especially if you are married and have children.
Wading through the many types of life insurance policies that are available can be a daunting task. It is important that you take the time to figure out which one might be right for you.
One of the most basic and affordable types of life insurance is called term life insurance. Although this kind of policy may only be temporary, it usually provides coverage for a pre-determined period of time, often between 1 and 30 years. If the person who is insured under the policy dies before the term is up, his family will receive the amount of money the policy is worth. Once the policy is up, if the insured person is still alive, the policy can often be extended or converted into a permanent policy.
Another type of insurance is whole life insurance. It is almost similar to term life insurance but includes an investment component which allows the policy grow cash value which you can borrow against. The investment component can be in the money markets, bonds or even stocks. Compared to term life insurance, whole life insurance is more expensive. This is due to the commissions and fees charged for the investment. Another down side is that there is no guarantee that your investment will make money. The premiums remain the same over the whole period of the insurance policy. Whole life insurance can be divided into three groups, universal life, traditional and variable life.
Another type of insurance is whole life, which also goes by the name “permanent life insurance.” It is similar to term life in some ways, but does have a major difference: It includes an investment component, which could be in a number of areas such as money markets, bonds, stocks, or more. This kind of policy can build up a cash value, and if desired, you can borrow against its value. However, there are drawbacks. For one, your investment might not make money, meaning the policy could have little or no value against which to borrow. Also, you’ll have to pay various fees and commissions on your investments, which can be very pricey. Traditional, variable life, and universal life are a few common varieties of whole life insurance.
This type of insurance allows enough time generate substantial savings and is therefore beneficial for people who need insurance into their 70s or 80s. With the long periods of accumulating considerable value, this type of insurance is a form of long term saving. For people who feel they cannot wait up to their 70s you need to take term life insurance and then find a different form of saving for your retirement.
Overall, it is important to research the different kind of life insurance policies available to you, and then you can make an educated decision on which one will best benefit you and your family. There are many factors you will need to consider, such as your age, your needs, and the number of beneficiaries you have. Ultimately, when you select the right policy, you can live without the stress of wondering how your family will survive once you are gone.
Graham McKenzie is the content syndication coordinator a leading South African Life Insurance and Life Cover website.
Leave a comment