What Type of Life Insurance Policy is Right for You?

Life insurance is an important part of financial planning. You will come across different products when choosing and shopping around for life insurance policies.

According to Gibraltar BSN, being familiar with the differences between these products will help you make the right coverage decision per your goals and needs.

Why You Need It

Most importantly, you could choose and buy an insurance policy. Many experts agree that adults with kids and careers must have coverage should something bad happen to them.

But most Malaysians haven’t gotten this memo. As a matter of fact, some studies show that more than 5.1 million Malaysians either don’t have life insurance or lack some sort of adequate coverage.

However, the global pandemic, Covid-19, was a wake-up call for many. The number of people who have now acquired insurance has increased by 45% globally. Plus, most have realized the benefits of having life insurance, including better eligibility and rates, coverage for several financial obligations, and income replacement.

Basic Features

At its core, this insurance guarantees financial support to your family and everyone depending on you when you die. The way life insurance Malaysia carries coverage can be defined through the following basic features:

• Cash value
• Policy term or length
• Beneficiaries
• Death benefit
• Premium

The Cost

The life insurance cost depends on several factors, like the coverage amount you need, type, health, and age.

In general, younger people are in good health and should expect to pay less for their insurance than elderlies who could be suffering from several medical illnesses.

The coverage amount you require may also impact the total cost. As you add more coverage, the premium amount will increase too. 

When choosing a coverage policy, make sure it is enough to cover your needs. But it shouldn’t be too costly for you to afford.

Types of Life Insurance

You have decided to purchase life insurance for the kind of monetary protection it provides.

But which kind of life insurance policy is suitable for you?

There are many life insurance products you will come across in the market when shopping around. The most common ones are:

1.      Term

This is a type of policy bought for a certain period. It pays cash to every named beneficiary if you die during the term. The insurance aim is to offer coverage at a low cost for a particular period.

Term life insurance includes a provision allowing the coverage to renew or continue when the period elapses, even if your health status has changed.

But those premiums can be much higher than the original policy. Be sure to inquire what the premium amount will be before renewing. In addition, ask whether you will lose your right to renew when you reach a certain age.

2.      Whole

This kind of life insurance provides an amount of coverage throughout your life. Having an account within the insurance policy helps in building a cash value over time. This is usually done by adding interest and using part of the premium payment.

An insurance policy in this coverage has ensured your premium won’t increase. Plus, the cash value will earn your fixed return rate, and the death benefit will remain the same.

3.      Variable

A variable life insurance policy is a kind of coverage, which enables you to invest money from the value of your cash in different funds provided by the insurer. This may include insurance funds.

Although this kind of coverage comes with a minimum death benefit, the amount of cash value won’t be guaranteed and may depend on the market conditions.

In other words, you can earn more interest than you have with whole life insurance. However, the policyholder will bear the risk of investment if the funds underperform.

4.      Guaranteed Universal

Death benefits are assured with a guaranteed universal life insurance policy, and your premium amount won’t change. Technically, there is little to no monetary value in the policy.

Plus, your insurer will demand timely payments. It is possible to choose the age at which your death benefit should be granted. This can be 96 or 100.

How to Choose the Right Type

Choosing the right life insurance Malaysia takes energy and time. It can as well feel hard on your emotional level. This pressure can force you to think of something you don’t wish to happen.

But life insurance policies are there to offer protection to all your loved ones when you pass away. If you need financial protection for your loved ones, consider several factors.

One factor you shouldn’t overlook is age. The younger an individual, the more options they are likely to choose from. For some policies, such as term life insurance, an individual’s eligibility to buy ends when they reach 60 years.

The insurance amount coverage you need is another aspect to look at. Assessing the number of beneficiaries will help clarify the amount of insurance coverage you should get. Reflect on what amount feels right and look for a reliable to see the plan through. The options for coverage depends on what is provided on every kind of insurance policy.

In addition to that, prioritize gender when choosing the right type. Females live around eight years longer than their male counterparts. This translates to less costly policies for women. But the gap in this life expectancy has started closing in. Nowadays, insurers don’t just look at gender. They also look at the age factor.

Last but not least, it is important to use the insurance company’s information when choosing the type of life insurance. Besides the company's policies, consider researching the insurer offering you insurance. Remember to look at the following:

• Exclusions
• Solvency ration
• Ration for claim settlement

The Takeaway!

Like other insurance policies, a life insurance policy is not meant for everyone. But should you need one, consider factors like age, gender, coverage amount, claim settlement ratio, and your family needs. This way, you can determine the kind of life insurance you should get.