It took me a while to get life insurance coverage. I had thought about it over a period of two years – these thoughts were amplified whenever I heard or witnessed something tragic. I wish I had taken the cover earlier in life, but in all and all I am happy I made the decision.
Many people just like me have gone through this phase or are going through it. A moment of indecision as to whether they need life insurance coverage.
A life insurance cover is more than a policy where you pump in part of your salary for an eventuality that might or might not happen. The major reason many of us take out a life insurance cover is to protect our families when we die.
As ominous as the topic is, we cannot wish it away. The best way to approach it is to be prepared for it. Taking out a life insurance cover will give your loved ones a financial lifeline should you pass away. It will help them manage mortgage payments, and school fees and cater to daily expenses.
A life insurance cover will come in handy in case you lose your livelihood due to an accident or critical illness.
Here are six things you probably didn’t know about a life insurance policy.
You Can Cash-In Early
Several life insurance policies allow holders to draw part of the benefits to cater to expenses related to terminal illnesses. A good example is the critical illness cover which will pay out a lump sum towards the treatment cost and also support your loved ones should you pass on.
Check with your insurance providers to find out which illnesses are covered under your policy.
You Don’t Necessarily Need Medical Tests
It is almost expected that at some point during your application for life insurance coverage you will have to undergo several medical tests. Life insurance companies demand these tests for good reasons. The main reason is to evaluate your risk factor so that they can tailor your cover appropriately.
But, did you know that some life insurance policies do not demand medical tests from their clients? These kinds of policies are known as no medical life insurance covers, and are ideal if you’re looking for insurance coverage but don’t want to undergo any medical tests.
The insurance provider will ask you general questions about your health. It is important that you answer these questions honestly as any form of dishonesty may deny you your benefits. If from your responses the insurer deems you to be in good health, they will hand you the cover without requiring additional tests.
You Can Change or Update Your Policy
Many of us are oblivious to the effect that insurance policies are not cast in stone and can be amended as time goes on. Our needs and responsibilities change as we grow. The reasons you had for taking out life insurance at 20 are not the same as you’ll have at 30.
Similarly, your needs also change in your twilight years. The good thing about life insurance covers is that you can change the terms to fit your immediate needs. You can increase the cover to cater to the education of an additional child or reduce the cover once your children are all grown up.
Besides changing the amount of cover, you could also update the list of beneficiaries with time.
It Comes with Premium-Waivers
Some life insurance covers have a provision where the holder can be exempted from paying monthly premiums under special circumstances. Your insurance provider may waive off future premiums under agreed special circumstances.
Consult your insurance provider to find out if your cover has this option. Further, find out the circumstances under which the premium waivers are considered.
You Can Use It as a Collateral
Something I did not know and am certain many of you do not know is that you can use your life insurance cover as a security for a loan. It is not the best move, however, when you are at your wit’s end and nothing else seems plausible this feature could come in handy.
It is Tax-Free
Benefits from a life insurance cover are not taxed. If you are asked to remit taxes following the death of a loved one, chances are high that the tax is charged on the deceased estates and not the life insurance benefits. Set up a trust to avoid the likelihood of the life insurance benefit being included in the deceased’s estate.
Conclusion
I have shared from my experience six aspects of life insurance most people may not have been aware of. There are many other little bits tied to life insurance that are not common knowledge. It helps to read the fine print and enquire from your insurance provider about the full benefits of your life cover.
