|
|
|
| |
|
|
 | |||||
We insure our cars, houses, speedboats etc without any hesitation whatsoever, but so many people fail altogether to insure their most prized possession - their life. Similarly, when we insure our cars, boats etc we do so at a level whereby we can replace such items for at least the same value if not higher. I know you cannot replace your life, but you can ensure the ones you leave behind will, as close as possible, be left a life that is comfortable and secure. This is how proper protection planning can eliminate the financial element of the trauma of losing a loved one and give you and your family peace of mind in the fact that they are protected. Protection has many guises; Life Insurance, Critical Illness Cover, Income Protection, Hospitalization Benefit, Medical Cover, Homebuyer Protection etc. To avoid complicating the topic, this article relates mainly to cover that protects our lives; life and critical illness cover. Life Cover will pay in the event of your death. Most polices will pay the benefits once the death certificate has been received but some will pay benefits upfront if a terminal illness is diagnosed. In order to qualify, you have to be diagnosed to die within six months and this type of benefit will help make your last months more comfortable. Critical Illness protects us from the illnesses that do not always kill us nowadays due to the advances in medical technology but nonetheless have a massive impact on our lives. Examples are Cancer, Heart Attack, Stroke, MS, Kidney failure, Heart Surgery, Alzheimer's, Paralysis, Blindness, Burns, Coma, Deafness to name but a few. You may survive one of the above but how would it impact on your ability to do your job now and earn. Moreover, how long would your employer pay you while you are absent from work for long periods of care and recuperation? Critical Illness is there to protect you whether it is to get the best treatment available, pay bills, ongoing care, gaining skills for a new career or all of the above. Similarly, there are three main categories on how cover can be structured i.e. Level Term, Whole of Life and Endowment. The explanation of these are as follows:- Level Term - you select a term for the cover you require at outset. The policy never has any value and ceases to provide any cover once the term has expired. This type of cover is popular since it is relatively cost effective. Term is good for covering specific periods but since it has no underlying value the premiums paid are an unmitigated loss. Whole of Life - this literally covers you until the day you die. The premiums are higher since you will make a claim one day. It can be structured so you do not have to pay the premiums until you die but over a selected period from outset. The policy does build up a residual value after a number of years and can grow to offset the premiums you pay. Although more expensive, it is very popular since you know you are covered irrespective of how long you live and it has a residual value. Endowment - this provides cover for a selected period from outset and has a nominal value throughout. Typically this is used in securing property with an interest only mortgage whereby the cover protects the loan and the value pays the outstanding loan at maturity. International Pensions can be structured similarly, whereby if your pension target $500k in 15 years, you can underwrite the pension for that amount in case you are not alive to fund it throughout. The pension is then passed on to the family after your death. How much you need is always a factor that many have difficulty grasping. To some people, I have to say "something is better than nothing"! A quick rule of thumb is how much you would need in your bank account today to allow an income that would maintain your present lifestyle every year. Then decide on a budget you can afford to pay either monthly, quarterly or annually that you are willing to spend. There will be a vast difference on what your budget is and the actual cost of what you think you need. The human psyche still hates spending money on what will be the most important financial factor to your family after your death. It is important to sit with an advisor who can establish which type of insurance is most suitable for you and then do extensive quotations in order to secure the best terms (not cheapest) for you. It is advisable to use the biggest names in insurance. Local companies may provide some attractive rates but will they be there or ready to pay when you die. Always look for companies who are rated AA and have been around a long time so you have the peace of mind that your claim will be honored without delay so those important benefits will be passed to those who need them most. Even though you have died, the bills do not go with you and your family will rely on the money your cover will provide. Protection has many business applications too from Corporate Life Cover to providing Double Option agreements or Key man cover for Executives. Whatever your requirement, personal or business, it pays to make sure you take some action and get yourself properly protected.
|
|||||
 | |||||||||||||||
|
