What is Life Insurance?
It’s when one takes an insurance policy on one’s life for a sum of money in exchange for a premium. In other words, if someone passes away, the amount they have insured on themselves goes to the pre-defined beneficiary. The foundation of Life Insurance is to recognize the value of human life, and although human life is priceless, the policy provides some compensation for family members in the case of the passing away of the person who is insured under the policy.
How does it work?
There are two types of Life Insurance plans:
- Protection Policies: This type is considered the most affordable type of life insurance and is designed to provide a benefit, such as a one-time payment, in the unfortunate case of a death to the insured person. This is also known as Term Life Insurance and is most suitable for individuals with existing health issues.
- Investment Policies: The objective of this type of policy is to serve as a protection for the entire lifespan of a person (up to their 95th birthday). This is achieved by creating growth of capital through the payment of premiums on a fixed interval basis. This is also known as Whole Life Insurance or Variable Life Insurance.
Several variables are considered when looking at Life Insurance. These include: Age, Nationality, Gender, Family history, and the Use of Tobacco, all of which are used to determine the insurance premium.
We also consider the insured amount on the person’s life i.e. a person insuring 1,000,000 USD on their life would pay more than a person insuring 100,000 USD.
Finally, when choosing a Life Insurance policy, one has to decide on:
- Death benefit
- Premium to be paid on monthly basis
- Length of coverage – (how many years)
There are different premiums for each of the variables; Term Insurance provides life insurance coverage for a specified amount of time, and it doesn’t accumulate cash – this is considered the most pure form of life insurance where the premium provides protection in the unfortunate case of death and nothing else. It is also more affordable than a permanent policy (Whole of Life policy) and allows individuals with limited income to provide sufficient coverage for their families.
Whole Life insurance is an insurance that covers the remaining life time of the insured. This policy builds up the cash value (benefit) up to the date of maturity, and it allows the owner of the policy to access the money at a time of need.
Why Petra Insurance?
Choosing the right Life Insurance policy can be complicated with many variables and factors to consider when evaluating and making a decision on a policy for you and your family.
It is extremely important to have an advisor you can trust. it’s also critical that you ask all the questions that are on your mind since there is so much to cover and so much to read.
A life insurance advisor would be the most qualified person to answer these questions and at Petra Insurance Brokers we pride ourselves with the clarity and transparency we provide to our clients.
We’ll answer the questions and clarify any concerns you may have. We will ensure that your decision is the right one for you and your family. Our role is to ensure that you have the confidence in the policy that you have chosen to protect the interests of yourself and your family.