No one can truly predict where and how they will be the next minute, let alone tomorrow. Life is very unpredictable and this means one thing – you must always plan for life after you are gone, especially if there are people who depend on you.
A good place to start with is to take out life insurance. This plan helps to soften the blow for those you leave behind by handing them a payout which they can use to pay their bills or cater for burial expenses. But with several life policies now available in the market, it’s easy to get confused on which one best suits you and your loved ones.
In this article, we take a look at five common types of life insurance policies and their respective benefits.
Whole of Life Insurance
This policy, which is also commonly referred to as permanent life insurance, is designed to provide lifelong protection to the insured. The premiums are fixed and do not change irrespective of the policyholder’s age. The plan pays out a lump sum upon your death.
This type of policy is costlier than most other life plans, but it can be a good option if you want to guarantee that your loved ones will be taken care of after you’re gone.
Level Term Insurance
Level term insurance is a popular choice for those looking for cover for a specific period, such as 10 or 20 years. Like the Whole of Life, it pays out a lump sum upon your passing away.
As it can be expensive, you should weigh the benefits versus cost quotes to decide if it’s right for your needs. Most insurance providers offer the option to extend your cover if needed, although this could see your premium rates change.
Some people view this policy as a good saving plan to lock in the premiums for 10 or 20 years. If you were to pass away during the term, your beneficiaries would receive a lump-sum payout equal to the sum assured (the amount initially agreed upon in the policy). They can then use it to pay for their education, clear any unpaid debts or even pay for a mortgage.
Over 50s Insurance
Just as the name implies, the Over 50s insurance is available for people who are 50 years and older but rarely beyond 80 years. Like most other life policies, it pays out a lump sum upon your departure or diagnosis of critical illness.
Unlike Whole of Life and Level Term plans, its premiums are considerably lower. However, it’s important to note that cover can be limited depending on your age and health. Is the policy worth it? Absolutely! Remember, we’re living longer than ever, and this plan can help you stay protected during your old age.
Income Protection Insurance
If your family depends majorly on your income, income protection insurance can be an intelligent choice. This type of policy pays out a monthly sum if you’re unable to work due to illness or disability and commonly covers between 50-75% of your income. This can be a lifesaver if you cannot work for an extended period and is something to consider in 2022.
This insurance cover caters to people in every profession, and it is an excellent financial remedy for a significant loss of income.
Critical Illness Cover
Having a critical illness can be a traumatic experience, both physically and financially. The critical illness cover pays out a lump sum if you’re diagnosed with a pre-defined critical condition, such as cancer or heart disease. Your loved ones can then use these proceeds to pay for medical expenses or to live on while you’re recovering.
This policy can be invaluable if you need to cover medical expenses or make alterations to your home to accommodate a disability. In 2022, it’s good to consider this type of policy to help you financially if you are diagnosed with a critical illness.
Which of these plans best suits you?
As with anything, all of these types of life insurance policies have their pros and cons, so it’s essential to weigh up your options and choose the policy that’s right for you. In 2022, it’s vital to consider life insurance as a necessary part of your financial security. If you still can’t decide, we recommend speaking to a trusted insurance broker to help you find the best policy for your needs.
As we said, you can never tell when the inevitable strikes, so plan early and secure the future of your beloved in 2022 and beyond.