Death is part of life’s process that is definite and has
nothing to do with choice! Most people often say “God forbid” as nobody wants
to die. It’s a debt that all must pay but when is what no one can determine.
The fear of death becomes overwhelming when there are several unfinished tasks
that we keep procrastinating about and putting off for a later day. One of such
is task is providing for our families and leaving a legacy when it eventually
occur. Remember, death does not give notices and it’s usually sudden without
time ctrl Z.
Insurance is a product/service you buy when you don’t need it
but becomes too late when the need arises. Life insurance therefore is a policy
taken by the insured on his life against his death and sum insured payable to
the beneficiary. Overtime, Life Insurance has evolved and serves both the
living and the dead. The beauty of Life Insurance is that the insured can reap
the benefit of the policy dead or alive depending on the type of policy
and duration. The benefit goes to the
beneficiary upon the death of the insured and to the insured upon maturity of
the policy, whichever comes first.
Three (3) Life Policy types will be reviewed and the
elements/modus operandi will be highlighted:
1. Group Life: usually taken by a group of people working in the same organization (a
company with up to 4/5 staff is required by law to take this policy on behalf
of their staff) or a society/association. The policy can be extended to cover
burial expenses and carriage of the corpse to the point of burial (seek
advice/information for the extensions). Key elements include:
· Premium
is usually calculated based on the age of the insured or the average age of the
people involved if the number is large and not all becomes cumbersome to
confirm the ages.
· For
the employees, it provides cover for 3 times the annual income and only covers
during active service; usually from home to the office, while in the office and
office back home (not office to club, etc).
· Renewable
every year and the risky nature of the job is also considered in calculating
the premium payable. Premium for a security/policeman will be higher than an
office clerk.
· Employees
above 65 years of age are however excluded (probability of occurrence).
· Policy
can be extended to include permanent disability and medical expenses (Group
Personal Accident) resulting from an accident, etc. that may arise during
active service.
·
Benefit
can only be collected upon the death of the Insured
2. Investment Plan: Saving for the rainy day. This entails the gradual setting
aside of funds on a regular basis (monthly, quarterly, half-yearly or annually)
for a given period. In the event of the death of the insured, sum insured (sum
of the total contribution for the tenor I.e. 2, 5, 10, etc.), if the insured
survived the period of the insurance, plus accrued interest is returned to the
insured and the cycle can be started over. The ROI is usually better than the money market rate. Key features include:
· Setting
aside of a fixed sum over a period of time
· Amount
contributed cannot be collected until it reaches its surrender value e.g. 3-4 years for a 5 year policy. This is to encourage saving culture and discipline
while discouraging frivolous withdrawals
· Some
policies do allow part withdrawal of the amount contributed thus far. The percentage to collect however differs and it is determined by the Underwriters.
·
Can
be used to save for special events likes school fees, wedding, retirement,
building projects, starting a business, etc. Some policy also allows the
management of such funds for the payment of school fees as they fall to avoid
wastage by the guardian of the child.
3. Annuity: Operates like the pension plan and useful in planning for retirement
from service and old age when the physical strength fails. Provides for regular
income for the insured (monthly, quarterly, etc as agreed from inception).
Payment may however stop upon the death of the insured, depending on the
structure of the policy. Key features include:
· Bulk
sum is placed with the insurance company/underwriter for a specified period of
time for payment at installment.
· Age
of the insured at the inception determines rates to be applied and amount to be
paid at intervals
·
With
the e-payment, account of the insured is credited at the stipulated time till
death.
Nobody prays to die but it comes unexpectedly and those at
the receiving end are usually our loved ones (children). Promises from other
family members are never kept as they also have a basket of issues that needs
their attention. There is a popular saying that “it’s better to be prepared
than be sorry”. If death should knock
your door today, is the feature of your loved ones guaranteed? Do you have any
project in the pipeline that you want to save towards? Do you want to continue
earning salary during retirement?
The great part of these life policies is that sum insured
will only be paid to the beneficiary and cannot be cornered by family members,
creditors, etc. There are cases where deceased immediate families are thrown
out and properties/assets cornered by the extended families, creditors, etc. even
before the corpse is laid to rest. Don’t you think your loved ones deserve better? It’s
time to make that move and put that your resources to a better use for the sake
of your family!
Your input, comments and enquiries
are welcomed
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