Not sure if life insurance is worth the investment? Here are 9 factors that might make you want to take out a policy.
Life insurance provides a lump sum benefit to those who are financially dependent on you in the event of your death or terminal illness. This pay out from the life insurance provider can be extremely useful to your loved ones, as it can help cover ongoing living expenses or any outstanding debts you may leave behind.
This way, your loved ones can maintain their current way of life and not endure financial stress during difficult times without you.
9 benefits to buying life insurance today:
- You’ll have ultimate peace of mind that when you pass, your family and loved ones will have a financial safety net.
- Life insurance will pay a lump-sum benefit to help with financial gaps left behind.
- Payouts are generally tax-free.
- Some companies offer multi-policy discounts if you take out a joint policy with your spouse.
- Coverage can generally be bundled with other types of life insurance.
- Some brands will let you increase or decrease the benefit of the policy at later stages.
- There are types of life insurance that have a cash value. A portion of the paid premium is set aside and it either accumulates interest or is invested in the market. It can be borrowed from, withdrawn or paid out upon death by the policy holder.
- Most policies will provide an advance benefit, without a waiting period, to help cover immediate costs following death.
- As you get older and become more of a risk to the insurer, you may not qualify for a life insurance policy or will have to pay more.
Different types of life insurance
Among the hundreds of life insurance plans and packages available, there are three popular styles of coverage which all life insurance policies can be categorized as. Each of the three insurance types can be purchased as a standalone policy or put together in an insurance package.
The three types of insurance are life insurance, critical illness and disability. They all have the same basic purpose — give security to you and your family by paying a benefit that would help you adjust to the major changes in life, such as death, injury, illness, or disability.
The most basic form of life insurance covers you in the event of death. This type of policy can help ease any financial burdens by paying a lump sum to your beneficiaries when you pass. Furthermore, it helps your family adapt emotionally and mentally to changes brought about by death and disability through the financial benefit they’ll receive during a difficult time. Life insurance assures you that whatever may happen to you, your loved ones will still enjoy the same lifestyle.
Whole life insurance
Critical illness insurance
Critical illness insurance was first conceptualized in South Africa by a doctor named Dr. Marius Barnard. Involved in the world’s first heart transplant, Dr. Barnard was confronted by the fact that although he can save a person’s life, he cannot save them financially.
This type of policy t falls under the category of “living” insurance. It doesn’t wait for you to die before it pays you a benefit, it provides you with a payout while you still have a quality of life. Life insurance providers typically make a lump sum payment if you suffer from or have been diagnosed with a life-threatening illness, like cancer, stroke or heart disease.
Disability is a type of insurance that pays out a steady stream of income on a monthly basis. The payment could be up to 75% of your gross monthly income although it may be different depending on the insurance provider. It covers you when you become disabled and are unable to work because of an illness or injury.
Nowadays, leading insurance providers have increased their maximum benefits giving their clients more coverage. They have even included an optional benefit which allows you to take advantage of their rehabilitation program, which can help the policy holder get back on track.
This rehabilitation program pays a maximum amount of up to 50% of your gross monthly income if you are eligible. The rehabilitation program includes all the resources and training you can get to help you get back to the work force smoothly. This means covering the costs for approved rehabilitation programs, vocational training, special equipment and workplace modifications to ensure a smooth transition.