Critical illnesses and death are things that come at unexpected times in a person’s life. Even more devastating is the fact that they can leave you and your loved one financially depleted. Having a life insurance plans and policy ensures that your family is supported financially should you fall critically ill or pass away. There are different types of life insurance plans all with varying benefits.
In this quick guide, we explore six life insurance policies that are most recommended by experts such as Caspian Insurance.
Table of Contents
Level Term Life Insurance
This is one of the simplest and most straightforward types of life insurance. Level term life insurance offers your family guaranteed financial protection if you pass away or fall critically ill within the contract term.
The policy works on a fixed basis, which means that the payout amount does not change throughout the policy term. This gives you more peace of mind as your beneficiaries are guaranteed financial protection during the term regardless of whatever happens to you.
Mortgage Life Insurance
Mortgage life insurance is another highly recommended life insurance plan that is ideal for you if your dependents cannot afford the mortgage in your absence.
Worth noting is that the payout amount in mortgage life insurance decreases as you repay the mortgage. This means the more you pay your mortgage, the less the amount of coverage gets.
As with all life plans, it’s important to compare different mortgage life insurance policies before settling for the one that best fits your needs.
Whole of Life Insurance
Whole of Life insurance is a type of life insurance that lasts for the duration of your lifetime as long as you consistently pay your premiums as agreed with your insurer. It doesn’t matter what age you are, your family will receive a payout in the event of your death or if you fall critically ill.
The greatest advantage of taking out the Whole of Life insurance is that it lasts as long as you do. This means that your family is guaranteed financial coverage.
Critical Illness Cover
This type of life insurance cover will provide your family with a tax-free lump sum payout in case you are diagnosed with a critical illness or need to undergo surgery. Different policies offer coverage for different illnesses and surgeries. As such, it’s very important to know what illnesses a certain policy covers before going for it.
A critical illness plan will make it possible for your family to focus on your recovery as their financial needs are well covered during this time. In some cases, this cover can replace your income when you are unable to work due to the illness.
Income Protection Cover
If you fall sick or are injured and can no longer work, an income protection policy is exactly what you need. As the name suggests, this plan guarantees that you continue receiving a given percentage of your monthly income as you continue with your recovery.
There are two types of income protection plans; long term and short term. A short term income protection policy usually has a maximum claims period that is commonly one or two years. After this period, you are required to go back to work for you to claim again.
You can claim between 50-70 % of your income more than once. This means that if you fall ill and recover then unfortunately fall ill again, you can still claim.
Family Income Protection
Family income protection, also known as family income benefit protection, provides a regular income over a set period of time for your loved ones in case you pass away or fall critically ill and are unable to work. The premise behind it is that regular income is easier to manage compared to a lump sum amount and your family will find it easier to settle bills and live as normally as possible in your absence.
Family income protection insurance decreases as the years go by. For example, if you have a 30- year policy and you pass away 10 years into it, your family will receive regular income for the remaining 20 years.
If you have a young family, it would be wise to take out a policy term that will last until your children are able to fend for themselves.
Conclusion
Taking out life insurance is a crucial decision and something everyone needs to do. Before jumping ship though, be sure that you understand the different types of life insurance plans available so you can choose what’s most suitable for you and your loved ones.
We hope that this article has helped and will make it easier to make a more informed decision when choosing your next life policy.
