Usually the proceeds of the insurance policy are made available to the nominee within 3 months, provided all the relevant paperwork has been done.
Who should be insured?
The main wage earners in the family should be insured. This could be you, your spouse or both of you.
What should insurance achieve?
Insurance can meet many objectives. The important thing is to be clear about what you want to do. Insurance can:
- Pay the outstanding balance on a mortgage and other debts.
- Offset the loss of your income.
- Contribute to the future education of your children.
Knowing what you would like to accomplish with your life insurance policy will help you determine how much life insurance you need to buy and of what kind.
For how long will you need life insurance?
This depends upon the specific timing of your life insurance needs:
- When will your home loan be paid off? The amortization period of your mortgage will often determine how long your term life insurance policy should be.
- When will your children finish school? After that you may not need more cover for education.
- When are you planning to retire? After retirement pension becomes more important than insurance
Assess your life insurance needs before you begin looking around for insurance. This will ensure that you make the right choice.
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What are the advantages of Term Life Insurance?
Term life insurance is pure life insurance. It provides cover for a fixed time period. The cover is paid if the insured dies during the policy term. There is no payment if the insured survives. Term is by far the most cost-effective insurance available and should be the first insurance to purchase.
Term life insurance is an excellent choice for people in their family-formation years, especially if they are on a tight budget. It allows an individual to buy high levels of coverage when the need for protection is often greatest. Term life insurance is also a good option for covering needs that will disappear in time. For instance, if paying for a child's education is an applicant's major financial goal, it would be wise for the applicant to purchase a term life insurance policy that will cover the period of time necessary to reach that goal.
Return of Premium (ROP) Term Life Insurance:
Return of Premium (ROP) term life insurance is a relatively new product that combines the advantages of traditional term life insurance such as affordable, guaranteed level premium periods (10, 20 or 30 years), with a return of premium feature. At the end of the level premium period, 100% of the premiums paid will be returned to the policy owner. There is a price to be paid for this added benefit. The premiums for ROP policies are higher than premiums for standard term life policies. The insurance company will generally invest the additional premium during the term of the policy, which allows them to earn a return and give a premium-return guarantee.