WHY LIFE INSURANCE

Prevention is better than cure, is a common proverb which holds good when we bring up the topic of life insurance. To assure that our loved ones do not suffer financially due to the death of a breadwinner, buying a life insurance is imperative. Without breaking the bank, life insurance can be bought by paying a monthly premium, thus assuring the future of the ones left behind in the event of death.

REASONS TO BUY LIFE INSURANCE

The most common need for life insurance is to support the family of the deceased. Till the family members are able to settle down mentally and get financial matters resolved, receiving money via life insurance is a huge help.

The other reasons why life insurance is imperative are:

  • To pay off debts incurred
  • Funeral costs can be paid off
  • Just like banks that serve as a place for saving money, many insurance products have savings features. End of maturity period, money can be withdrawn.
  • Malaysia offers a yearly tax relief of up to 6000rm, if income tax is duly filed.
  • If an insurance policy is submitted along with an endowment plan, or if the insurance policy holder dies, the life insurance can also be treated as a fund for children’s educational plans.
  • Other financial matters (child’s education, sustenance of the family, etc) which a life insurance can take care of in the form of securing assets and savings.

TYPES OF COVERAGE

  • DEATH

Old age, any serious illness, or accident causing death will allow you to claim life insurance. Each circumstance takes varying time to collect the money assured. This is an important point to note.

  • PERMANENT DISABILITY

When an accident or sickness renders you permanently disabled and you cannot earn any income, a payout is assured. However, the consulting/qualified doctor has to assess and confirm that the disability will restrict the policy holder’s inability to work and earn money.

EXCLUSIONS

  • In some cases, the life insurance payout will not be honoured. If the policy holder commits suicide, within one year of purchasing the policy, no payment will be made to the dependants/beneficiaries.
  • Also, if permanent disability or death occurs through dangerous activities like sea diving, bungee jumping and so on, the policy will not be honoured.
  • Unfortunate incidents like a terrorist attack will again not be honoured.

TYPES OF LIFE INSURANCE POLICIES

  • Whole Life Insurance: In this type of policy, ONLY upon death of the policyholder, money is paid out.
  • Endowment Life Insurance: This insurance policy provides both savings and protection for the said term. If the policy holder survives the term, then the sum and bonuses are paid out. If death occurs, the sum and bonuses are paid out within the term. Endowment plans can vary from 10 years up to a said age mentioned in the policy.
  • Term Life Insurance: Term life is marked for a said period only. Only if death occurs during the policy period, money is assured. If the policy holder has survived the term, then no payment is made. NOTE: Return on premium – In some cases, if death does not occur in the said term period, some amount of premium is paid back.
  • investment linked Life Insurance: You can save your wealth by opting for an investment linked policy. Premiums can be allocated towards an investment fund and this helps increase returns on the policy.
  • Medical and Health Insurance: Rising medical costs, requires you to hold a medical and health insurance. There are pre-hospitalisation, post-hospitalisation and outpatient benefits available for the policy holders.
  • Life annuity Insurance: In exchange for a lump sum money paid at the beginning of the policy, upon retirement the insurance company will provide either a lump sum or timely payments to ensure the policy holder has a steady income.
  • Mortgage reducing term assurance: If at all there occurs a situation where the policy holder cannot pay the housing loan, coverage under MRTA is possible.

To know more about the types of life insurance policies which may suit you, visit www.smartgenie.com to compare and understand what various life insurance companies in Malaysia have to offer.

 

Disclaimer: All information provided in this article/blog, published on this website is strictly for general information purpose only. SmartGenie does not provide any warranty about the authenticity and accuracy of such information. SmartGenie will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Please visit the websites of respective banks/financial institutions for more details about products.



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