Life is unpredictable. It’s futile and impossible to try to plan for and control every little aspect of it. What we can do is to protect ourselves from when life happens. There are several ways to do this, the easiest one is to look into purchasing a life insurance plan which, in simple terms, means keeping money aside that you can fall back on when incidents happen.
It is a common thought that life insurance involves only life coverage i.e. your family gets paid a lump sum in the event of your death, but this is false. Life insurance comes in various kinds, and obtaining a suitable one requires you know the various types and what situations they apply to. This article serves to do just that.
Life cover or life insurance provides financial benefits via a lump sum to the beneficiaries of the policy if the insured passes away. The beneficiaries of this policy are usually third parties like family members. Life coverage is divided into categories namely:
Whole-life plan: This policy pays out a lump sum to the beneficiary in the event of the insured passing away. The insured pays a fixed premium regularly from the time of purchasing the policy until the insured dies. This policy has a guaranteed accumulated cash value that you can cash in, sell, or use as collateral while the insured is still alive.
Limited pay life plan: This policy is similar to the whole-life plan except in the payment structure. Unlike the whole-life plan where the insured pays regular premiums until the event of death, the limited-pay plan requires the insured to pay a premium for a limited period. Once this period has elapsed the insured no longer pays a premium but still enjoys full benefits of the policy.
This policy is quite popular and offers several benefits but also has a significant downside: you pay much higher premiums during the limited payment period compared to whole-life insurance. If you’d like to know exactly how much limited-pay plans cost, you can get an accurate life insurance quote here.
Some other life insurance plans involve other payment structures and benefits; you can learn about them here. Not sure which to get or how much it cost? Get a quote on life insurance with iSelect, a service that allows you to compare insurance policies offered by various companies and pick which is right for you.
This type of life insurance offers financial coverage for up to 75 percent of your income if you are injured or otherwise incapacitated such that you cannot work and earn income. There are three key features of the income protection plan. These include:
- The sum insured amount, which is the amount that you get if you are incapacitated. Like we said earlier, it is usually about 75 percent of your total monthly income.
- The waiting time, which is the amount of time you have to wait for the benefit to kick in after being injured and off work. You have to be off work for some time before being eligible to receive benefits, however, this time can longer or shorter based on the price of the plan.
- The benefit period, or the number of months the insurance company pays benefits to the insured.
This plan pays out a lump sum if the insured suffers a fatal illness that leaves him/her unable to work. Trauma policy covers expenses like the repayment of debts, medical expenses, therapy, or rehabilitation programs like the ones offered by the healthcare center in Bridgeton, NJ.
Funeral insurance pays a lump sum to the beneficiaries of the insured to cover funeral costs. Some benefits of funeral insurance include terminal illness cover—which pays out a lump sum early if the insured is diagnosed with a terminal illness that is likely to result in death within 12 months—and accident injury benefit which pays out a sum of up to $50,000 if the insured incurs an accidental injury that causes serious damage.