This is one of the best ways to provide for the family when a person dies. Usually when a person is considered there are 2 main things that will need to be covered by the life insurance – this will include paying off the large debts like the mortgage or a loan, or for the family protection when a person dies this will help with the fact that they can maintain the same lifestyle.
There are different types of insurance policies depending on the protection needs of a person. For this, an independent life insurance agency from Mississauga, Ontario like should be consulted; they will be able to give a better idea on what needs to be done and which policies need to be bought. They are able to provide the financial services which will be able to be impartial, no-obligation third-party type advice providing the best life insurance tailored to the individual’s needs.
a. Term Assurance – This is the kind of insurance which is referred to as the term insurance. Here the amount that is required is chosen by the buyer; the term also depends on the person. In this kind of policy, when there is a death during the term, the policy will pay out the beneficiaries. The catch is when the person doesn’t die, the policy will not pay the premium back. This is further broken down into level term and decreasing term insurance. Most of the time the combination of the two will give a better solution, according to the Presidents Group.
i) Level term life insurance –, this will pay a lump amount when the person dies in the specified term. This amount is constant throughout the term. The premiums that are paid are also the same. This is the best option for a family protection.
ii) Decreasing term life insurance – Here the amount decreases with the term of the policy. The policies over a period will also reduce. The premiums will also be cheaper than the level term. This is used usually for the inheritance tax planning purposes.
iii) Family income benefits policies – This is a type of decreasing term policy. These policies are involved in getting regular income to the beneficiaries, till the end of the policy when there is a death. This is easier to understand as it is quite simple to calculate the amount that is needed.
b) Whole-of-life Policies – As the name, suggests there are many ongoing policies that pay out when a person does. These are more expensive than the term insurance policies as they will pay only if a person dies within a certain timeframe. This is a useful way to cover the future inheritance tax bill.
Pitfalls of the Life Insurance
Sometimes buying the wrong policy could mean that the life insurance will not pay for the family needs it the most. A life insurance should be able to provide a valuable cover and peace of mind. The fact is that the dependents should be able to get the most of the cash and for this the right kind of policy is the key for this. The following are a few of the pitfalls of the life insurance.
• Low start life insurance policies – These need to be carefully monitored. It is important to use price comparison sites to find the suitable life insurance policy. The monthly premium will surely increase throughout the term of the policy. So when there is a low cost in the initial years will cost a whole lot over time, especially in the case of the whole life policy. Whereas for the level term policy where the monthly premium will remain the same.
• Two is better than one – In some cases, the couples will go ahead with the joint policy or have one policy each. Joint policies will be able to pay out each other. But this is the fact that the policy ends with the death of one partner. Single policies are given more flexibility.
• Reviewable life insurance – If the quote is very low, it is important to check if the policy is a reviewable policy. The premium is only guaranteed for the first few years.
• Health issues when buying life insurance – Any information that is withheld about the health can cause a lot of problems in cases making the policy invalid. A pre-existing life condition will still be able to get the life cover.