Life Insurance – the very word says it all. It is all about insuring your life. Life insurance shields your family against all financial odds in your absence. These policies are of great significance to us. As correctly pointed out by the CEO of an insurance industry giant, “Insurance is the best known form of financial protection to guard against major uncertainties or vagaries of nature. As a thumb rule, a person needs to have at least a basic cover to protect himself in the form of personal accident insurance — which is the cheapest cover for self protection…”
Lets face it. A country that is marked by income inequality where the top 20% of families earned 45.2% of all market income in 1998, against 3.1% for the bottom 20% – many of the Canadians shy away from investing in a life insurance. In such a scenario, an in-depth understanding of the different life insurance policies available in the market is of crucial importance. So, while settling with one make sure whether your life insurance provides the coverage of your funeral and burial, or whether it will pay for the bills charged by the doctors and hospitals during the illness or injury that led up to your death.
Peeping into the world of Life insurance, you will come across two types of insurance policies: Term” life insurance policy and “cash value”. The “term” life insurance can be bought for 1 year, up to 30 years, or for any specific time period and is a temporary insurance coverage. It provides a cash refund at the time of your death, provided you die within the term purchased. But the disadvantage that comes with term” life insurance is the rate of premium which goes higher with age. Moreover, you do not get back coverage value in cash. Such an insurance policy does not offer the guarantee of renewal after the expiry of the term.
Therefore, you are left with the second option of life insurance policy called “cash value.” also known as Universal Life or a Whole Life insurance policy. In this policy the rate of premium remains the same throughout the entire time period. It provides coverage to the policy owner for the entire life time. This insurance not only offers death benefits but it also provides a cash value that grows over the years The policy holder is able to draw upon the cash value before death. Moreover you can renew your policy even after your first term is over. “Cash value” policy help you to supplement your retirement income. But even this life insurance policy has its drawbacks. Difficulty in selecting investment funds and payment of investment fees can be pretty costly. This complex insurance policy calls forth a ratio of death benefit to cash value in order to remain in effect.
With a large number of private insurance companies cropping up in Canada like Insuremetoo.com, selecting a perfect life insurance has become quite simple. Do your home work, understand the terms involved, weigh the benefits and disadvantages of the life insurance policies, and then call up your insurance agent. You will surely strike the best deal of your life. All the best!
