With our present economic condition, it is quite important to secure our family with an adequate financial cover should we die. Without this provision in place, there is always a risk that you may be leaving your partner or spouse with large debts due to loans and credit card commitments as well as the cost of regular household living expenses.
Some of the life insurance companies give life protection for individuals that are designed to provide your loved ones with a cash lump sum payment if you die or if you are diagnosed with a terminal illness and you are not expected to live more than 12 months and the death is expected to occur within the term of the policy. The coverage of the plan normally depends on your income, since your premium will be based on that. Some companies can also offer flexible policies, in terms of the amount of cover as well as the length of the policy term. Some offer a policy could start from as little as 5 years excluding those who are 18 – 44 years old who require a ‘Decreasing Term’ policy for mortgage purposes. In such instances the minimum policy term is 10 years.
To protect the family, Life Cover – Level Term plan should be chosen. With this kind of plan, the cash payout in the event of a claim remains the same throughout the term of the policy. Another type of cover is the Decreasing Term Cover, which is necessary if you require cover for mortgage purposes. Under this type of policy, the cover is reduced every year in a similar manner to how mortgage payments decrease under a repayment scheme where a decreasing term arrangement has been selected.
Normally, insurance companies would pay benefit entitlement early if the policyholder were diagnosed with a terminal illness. When the person is covered and expected to live not more than 12 months and death is expected to occur within the policy term, he could still enjoy the benefits of being covered. With the early pay, one could use the money for time away with loved ones or to take immediate action to help sort financial affairs.
The benefits of life coverage include provision of a cash payment in lump sum to help protect your loved ones during your death. You will enjoy early payout if you are diagnosed with a terminal illness. You can choose ‘Level Term” or ‘Decreasing Term’ cover which can be used for mortgage purposes if required. Tax free payments are provided although any death benefit is subject to inheritance tax and you will have peace of mind since your coverage is 24/7, 365 days a year.
There are conditions however that should be not ignored in a life cover. Most insurance companies do not provide cash surrender value. Either you receive a fixed lump sum payment in cash or a reduced value if you opted for decreasing term cover. Claiming for a terminal illness diagnosed with 12 months of the policy end date isn’t allowed. Normally, premiums are higher for those people working in occupations considered as high risk. Men and women in the armed forces are normally excluded from this type of coverage due to the nature of their work, a very high risk occupation.