KNOW YOUR INSURANCE: PART 1 OF 3.

i don't understand you...

You hear about insurances all the time. Term…blah blah blah…Whole Life…blah blah blah… What exactly do you know? How many types of personal insurances are there out there?

There are some basic categories of personal insurances. Here are some of them:

Health Insurance

A policy that pays an agreed amount of money if you become ill, suffer injuries or disabilities. You may be reimbursed for your medical treatments, or paid a lump sum of money (depending on your policy).

Some health insurance policies provide an income if you’re hospitalized, and/or cover the cost of medical treatments even after you leave the hospital.

Term Life Insurance

A policy that provides protection for a fixed period of time. The sum assured is paid if you pass away or are totally and permanently disabled during the policy term.

Term insurance doesn’t have a savings element (unlike whole life and endowment insurance), and doesn’t have a cash value upon cancellation at the end of the policy term.

Investment-Linked Life Insurance Plan (ILP)

A life insurance plan that allows you to determine how much of your premiums you wish to invest and how much goes to your insurance protection. The amount you invest is used to buy units in your choice of one or more managed funds. If you cancel your policy, the amount of money you will receive depends on the number of units you have and their total cash value.

ILPs offer a choice of funds for different levels of risk and projected returns. Some funds may get you higher returns, but the potential for loss is also higher. Returns are not guaranteed and neither is your principal.

Whole Life Insurance

A policy that provides lifetime cover, or until the age of 100. If you pass away during the policy term, your beneficiary will receive the sum assured.

You may also be covered for illnesses, accidents or total and permanent disability that happen(s) during the policy term (depending on your policy).

You may be required to pay premiums throughout your life or for a limited period of time (again, depending on your policy).

A whole life insurance plan may be participating or non-participating. Coverage stops as soon as the policy is cancelled.

Endowment Life Insurance

A fixed term life insurance policy that pays the sum assured and any bonuses or dividends that you may have earned at a pre-determined date in the future (also known as the maturity date). If you pass away during your policy term, your beneficiary will receive this payment. You may also be covered for illnesses, accidents or total and permanent disability that may occur during the policy term (depending on your policy).

An endowment insurance policy always has a fixed maturity date (unlike Whole Life Insurance).

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