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.
One thing to keep in mind if the policy is renewed is that the premiums you are required to pay will usually rise. Still, the fact that term life insurance is relatively cheap is one of its advantages. In fact, term life is generally acknowledged to be the best kind of insurance for its price.
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.
Universal life insurance can be a good option for people who want to build up value over a long period of time. Essentially, it’s a combination of term life and permanent life insurance that includes a tax-deferred, interest-accumulating savings account. This kind of policy is especially beneficial to people who want to have life insurance later in life. On the other hand, those who don’t think they’ll need life insurance for such an extended period should probably choose another type of policy, such as term.
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