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Why do I need life insurance?

Although no one can replace you or your worth to your family, you would want to make sure that they remain financially protected when you die. Life insurance is aimed towards providing that protection which your dependents would need if your financial contributions disappear with you.

Whether you are single, married, a stay-at-home spouse, young and healthy, or even a retiree, you need to be insured if you feel that your death would create a significant financial burden to your family.

What’s the difference between term life and permanent life insurance?

In choosing life insurance plans, the first vital question you have to answer is whether to pick a term life or permanent life policy. With term life insurance, your beneficiaries will receive death benefits if you die within a specified time period stated in the contract, for example, 10 or 20 years. On the other hand, permanent life insurance provides permanent protection, and so thus your family will be paid regardless of when you die.

How much amount of coverage do I need?

Although it varies from person to person, it is recommended that your coverage should be at least ten times your annual income. You should also consider factors such as potential income changes, mortgage payments, and other obligations or debts that you may leave your family.

If I choose a term life insurance, how do I decide on the number of years?

With term life, you are free to choose the number of years you’ll need cover for. This could easily be determined by factoring in your expected obligations in the future. For example, if you have young children, you should consider education costs and other expenses, and 20 to 30 years cover might be needed. But if your children are older and are likely to become stable anytime soon, perhaps a 10 to 15-year cover would suffice.

Who can I assign as beneficiary?

You can assign any qualified dependents as your beneficiaries, like a spouse, children, parent, or someone you owe money to. You may also wish to designate a certain charity which you used to donate to.

What are insurance riders?

A rider is an additional benefit which provides extra coverage to your existing policy. Typically, these riders are sold separately. They may make your policy more expensive, so purchasing these riders should be given careful thought.

What is cash-value?

A cash-value is a sort of savings account that earns tax-deferred money. It is separate from your death benefits, and the money in the cash-value account can be borrowed, take a loan against, or withdrawn. Only permanent life insurance offers a cash-value feature. 

What if I don’t die?

Many people view insurance as a waste of money if they don’t die. However, it’s no different from buying car insurance when you didn’t encounter any accident. Basically, you are purchasing security to protect you from a disaster, so having that peace of mind all along should be worth it.

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