If you’re the head of a household or the main breadwinner in the family then you really should have a Life Insurance policy in place. Over 51% of people in the UAE do not have Life Insurance of any kind!
Life insurance is often overlooked by many as it is sometimes the last thing to be purchased after a mortgage, a car loan, school fees and other expenses. Not only does Life Insurance protect your loved ones should anything happen to you but it also protects your current income today and in the future. As no one knows what tomorrow brings financial protection through a life policy is a key part of any financial planning.
By not having the right financial cover in place a family can easily be placed in a financially precarious position very soon after the loss of the main breadwinner. All this may seem obvious when you look at it in the cold light of day but how do you know what is the right policy for you? Do you really know the difference between whole of life and term life insurance and which one would best suit your particular needs? Whilst both types of Insurance are great at providing protection for you and your family, you really need to think hard about your financial objectives and understand the difference between the types of policies and how they work before committing to one in particular.
What Is Whole of Life Insurance?
This is a life insurance policy which is guaranteed to remain in force for the insured’s entire lifetime as long as the premiums are paid or until the maturity date of the policy.
If you’re looking for a permanent form of life insurance, then whole of life insurance is probably right for you.
KEY FEATURES OF A WHOLE OF LIFE INSURANCE:
Covers you for life as well as Critical Illness and Total and Permanent Disability.
- Provides death benefits.
- Tends to have higher premiums than term life insurance, but can potentially save you money over the life of the policy if in force for a considerable number of years. Simply put it becomes in essence self financing after time.
A whole of life insurance policy tends to favoured by consumers who like to know the fixed death benefit payout and the added flexibility to alter premiums if necessary and even make cash withdrawals if needed.
BENEFITS OF WHOLE OF LIFE INSURANCE POLICIES
Whole of life policies offer consumers the following key advantages:
- The policy premiums and the death benefit payout are both fixed giving you confidence and stability for any financial planning.
- There is a guaranteed substantial cash payout to loved ones in the event of death so providing complete protection for those that matter most.
What Is Term Life Insurance?
Term Life insurance offers more flexibility to policyholders and tends to be used to cover specific periods of time. Term life insurance is ideal for individuals who only really want to buy insurance for a specific period of time, for example between 10 and 30 years. As such it is frequently used as cover or protection until retirement age or until the mortgage has been paid off. Sometimes cover is extended until the children have reached an age where they have left home and are financially independent.
However there is nothing to stop term life insurance policies becoming a whole of life insurance policy so offering the same fixed and permanent financial protection for the policyholders and beneficiaries.
FEATURES OF TERM LIFE INSURANCE
- Provides death benefits only up until the age of 80
- Pays benefits only if you die while the term of the policy is in effect.
- Purchased for a specific time period, such as 5, 10, 15, or 30 years, known as “term”
- Becomes more expensive as you age, especially after age 50.
- The term must be renewed if you want coverage to be extended beyond the term length.
BENEFITS OF TERM LIFE INSURANCE
- Easiest to set up and the most affordable life insurance.
- Term life policies are simple and the fixed at the start date of the policy and remains at the same level with the same monthly or annual premium.
- Guaranteed protection for the family in the event of a bread winner’s death at a young age.
Deciding whether to purchase whole of life or term life insurance is a personal decision that should be based on the financial needs of your beneficiaries as well as your own financial goals. This is where it is worth taking the time to meet Insurance experts who will be able to understand your overall financial picture and what you want to achieve in the short term and longer term.
There is no obligation to buy when meeting with an expert –nor should there ever be. What you will get though with an expert is thorough insight into Life Insurance products so that you what you are getting with your policy. Openly discuss your thoughts with a Life Insurance expert before committing to a major financial decision as only then will you know that you have the right protection for you.
For information on the article please contact:
Sergio Pani – Ulysses Communications & Promotions
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