This is a fast paced era often marred by incidents and events that can leave a scar on the life of our loved ones. Perhaps, financial security is something we all work hard towards, an indication of respectable and self sustained life we want to lead. Savings alone will do no good due to rising inflation and increase in cost of living. It may sound scary or perhaps uncomfortable to discuss the financial constraint your family may face after the death of the bread winner.
To overcome this fear and to secure the monetary needs of our loved ones, having a Life Insurance is one of the most sensible things to do. Regardless of whether you’re kick starting your career or an experienced worker, having a life insurance does wonders. With fast paced progress in the insurance sector in the Philippines, you’re literally spoilt for choices when it comes to choosing a life insurance. What used to be once a bland endowment plan has today magnified into a plethora of products such as Term and Unit linked plans. Life insurance has undergone a sea of change over the last decade or so to offer the best financial protection, keeping in mind various risks the current era poses.
If you’re not convinced that you should have a life insurance, lets tell you all the benefits you need to be aware about. At the end of this article, you will be able to clearly outline the need for life insurance and sign up for one if you haven’t done so.
Cover of Life
The primary reason we buy a life insurance is because it assures endowment or death benefit to the family members. This sum assured is quite high (depends on what you opt for), sufficient enough for the family to lead a respectable life until they settle down and overcome the loss. You can also nominate various family members and allocate a percentage of the sum assured as you wish, ensuring financial welfare for all the members. An insurance option such as Term Insurance ensures maximum coverage at minimum premiums.
Option to Include Supplementary Benefits (Riders)
As stated earlier, life insurance segment has been undergoing a massive change over the last couple of years. The insured member can enhance the policy value and cover additional risks by inserting riders into the existing policy. These riders come at a nominal cost and offer protection for all those risks not covered by the basic policy such as payment of additional benefits in case of accidental death, monthly payout for Total or Permanent Disability (TPD), waiver of future premium payments in case of disablement and many more. Plus, in case of critical illnesses, you can expect to receive payments for treatments if you’re signing up for the rider.
Doubles Up As An Investment Option
Of course, life insurance is a form of investment which offers attractive returns after the end of term. If the insured member survives the term, he/she receives the premiums paid along with interest charges as well in case it's a traditional life insurance plan such as an endowment plan. VUL (Variable Universal Life Insurance) is one such popular life insurance product which offers protection for life along with market linked returns on investment. Your hard earned money is carefully invested into funds managed by professionals to maximize returns. VULs are easy to understand in terms of our prevailing financial knowledge and offers flexibility such as option choose a premium payment as per the customer’s budgetary convenience.
This way, you life insurance is no longer just a product purchased to indemnify against risks but also offers solutions for the investment needs to manage the financial obligations of the future. Depending on the tax laws, the premiums made under life insurance can also be claimed as deductions.
Flexibility To Switch Over to Another Type
Many insurers offer flexibility to switch over to a different type of life cover during an active policy term. Based upon your requirements and commitments, you can be eligible to convert to a policy of your choice.
Serves as Collateral For Loans
Your life insurance policy can also act as a collateral to secure the loan when you apply for retail credit. The bank may accept pledging the life insurance to add weightage to the loan application.
Now, that you’re convinced (Hopefully!) about the need for life insurance, it's paramount to compare the policy options available in the market today before choosing one. You don’t want to end up choosing an inappropriate cover or pay a high premium for rest of the period.