You might be youthful and carefree now, but your responsibilities will increase as you get older. That is a foregone conclusion. If you have children, you will need to fund their education, your retirement, and care for ageing parents. That, too, is a foregone conclusion. You must select an insurance policy based on your future goals and needs. There are a few types of insurance that cater to various needs.
This is the most basic and least expensive type of insurance. Term insurance is a pure risk plan that is purchased to protect your future earnings and the financial security of your family in the unlucky scenario of an accident, illness, or death due to natural causes. A term plan is so named because it covers your life for a set period of time, typically 10 to 40 years. The policy will expire at the end of that term. The rates are fixed and need to be paid for the duration of the premium-paying term in order for the policy to remain valid. If the policyholder dies before the policy term expires, the death benefit is paid to the nominee. However, there is no compensation if the policyholder survives the specified term. Some term plans even include additional perks that protect you against serious diseases and accidents.
Whole life plan
Whole life insurance provides coverage up to the age of 99. The distinction between whole life and term insurance is that whole life plans offer a guaranteed payout because they cover an individual until the age of 99. There is a death benefit, a survival benefit, and a maturity benefit in these plans. However, the premium for these plans can be nearly three times that of a term plan. Premiums can be paid on a regular or fixed basis, and both alternatives cover the policyholders for the rest of their lives. When implemented earlier, the whole life plan provides significant benefits.
Endowment provides the added benefit of both insurance and savings. It allows you to save regularly over a set period of time with a guaranteed minimum sum payable at maturity. Endowment is an excellent way to save for future needs such as your child’s schooling or your old age. The maturity amount is paid if the policy holder survives the policy term. In the unfortunate event of the insured’s early death, the beneficiaries will obtain the sum assured plus any applicable bonus. Endowment is thus a risk-free plan that provides a certain level of safe investments.
Retirement plans provide both investment and insurance benefits. Premiums, also known as pension plans, can be paid routinely at periodic intervals. One type of retirement insurance is whole life insurance with a regular payout after a set period of time. Immediate annuity plans are single payment plans that provide a consistent stream of income during your retirement years.
No matter what you choose, it is still the safest option to invest in financial protection insurance plan Malaysia.