When buying life insurance, you should look for the policy that will give you the most protection at the most reasonable premium.
When considering a policy, we recommend that you follow these steps:
- Decide what coverage you need
- Determine how much you can pay
- Choose the one that best suits your needs from the various coverages available
- Choose a reputable insurance company
What types of life insurance are there?
In the case of life insurance, in the event of a specific event (usually the death of the insured), the insurance company will provide cash compensation to the beneficiary. Life insurance companies offer a variety of different policies and knowing the basic concepts of each policy will definitely help you buy a policy. There are basically three types of traditional life insurance:
(i) Term Insurance
Term insurance provides coverage to the insured for a specific period. When the validity period expires, the policy will lapse. If the insured dies within a specified period, the beneficiary will receive a death benefit. Generally speaking, of the three types of life insurance, term insurance provides the greatest immediate protection at the lowest cost.
Certain term insurance policies are renewable; the premium may increase with each renewal as the insured ages. Before deciding to purchase this type of coverage, you must calculate how much you will pay in future premiums and how long the policy will last.
Some term plans are “convertible”, meaning that, before the expiry of a specific period, the term plan can be converted into a whole life plan, savings plan, or any other policy specified by the insurance company, regardless of the health status of the insured. The premium for the new policy will be determined based on the requirements of the new policy and the age of the insured at the time of conversion.
(ii) Whole life insurance
Generally speaking, whole life insurance provides coverage to the insured up to the age of 100 or above. Premiums are determined based on the age of the insured at the time of purchase of the policy, and generally remain unchanged during the term of coverage (unless otherwise specified by the insurance company). Unlike term insurance, whole life insurance accumulates cash value for use.
(iii) Savings Insurance
Savings insurance is basically insurance that guarantees you a lump sum of cash at the end of a certain period. If the insured dies before the specified period, the beneficiary will receive a death benefit.
The above three types of insurance have their own differences, but they also have some commonalities. Many insurance plans combine features of all three. There are many types of insurance available, and you should be able to find one that fits your needs.