A Personal Insurance proves to be a cover which is the safest and the most secure way to protect your family or dependents against financial contingencies that may arise post the unfortunate event of your untimely demise. It provides payment to meet everyday expenses and any outstanding debts.
What are the types of personal insurance available?
The main types of personal insurance include:
- Life insurance
- Disability insurance.
- Critical illness insurance.
- Long-term care insurance.
- Health insurance
- Disability insurance restores lacking income, so you must be earning at the time of purchase of the cover.
- You will have to surviving your ailment for a particular period (generally 15 to 30 days) to obtain a debt from critical illness insurance.
How these policies work and assist you?
- Life insurance: Generally, benefits from life insurance are tax free, if stipulated in the terms, and a lump-sum amount id received by your named beneficiaries’ consequent to your death.
Benefit: It ensures that your named beneficiaries can pay off your debts and maintain their standard of living after your death.
- Disability insurance: This insurance gives a monthly payment that substitutes a part of your lost income if you are incapable to work as a result of illness or injury.
Benefit: It allows you to maintain your standard of living if you are disabled and unable to work.
- Critical illness insurance: This insurance pays a lump-sum amount on the first diagnosis of a severe medical ailment (e.g. cancer, heart attack) covered by your policy
Benefit: It allows you to cover extra costs associated with an illness, or utilize the payment for any other purpose while or post the recovery.
- Long-term care insurance: This insurance provides cash payments if you require care in your home or in a private or government facility
Benefit: It allows you to cover some or all of the costs of long-term care instead of using your savings.
- Health insurance: This insurance covers a portion of health care costs not covered by your provincial health insurance.
Benefit: It gives you and your family affordable access to the health care you may need – at home or out-of-country
Three points to perceive regarding life insurance:
1) Your Dependents: You must count the life insurance policy which adequately pays off the mortgage or any other debt, surplus with the amount that sustains your family. To determine the amount of basic life insurance that you require to buy should hold expenses including the care of grandparents, child education expenses or any family member with special needs.
2) The Capital of your Insurance: Life insurance generally falls into two categories:
- Term Insurance
- Permanent Insurance.
When your budget is on a low-set, Term insurance may be your opening. Later you can turn it into a Permanent insurance, without having to prove that your capital concedes the higher premium.
3) Your state: A major factor you should take into consideration is that it is worthwhile to get an insurance if you have any major health issue. As there may occur chances of dismissal by the insurance company if they find their scheme less fruitful for you. Hence, its ideal to have life insurance at a young age. So, invest in life insurance as soon as possible.