|
An investment-type
policy provides cover for as long as you live. Since the policy must eventually pay out, it builds up an investment value
that you can cash in by surrendering the policy. However, it takes many years for a surrender value to build up and, in general,
whole-of-life policies are an expensive buy if your main need is protection. As it is considerably more expensive than the
protection-only term life insurance alternative some advisers believe it's better to keep your insurance and investment
needs separate. Life insurance includes 'investment-type' and 'term' insurance. Investment-type insurance
includes policies that pay out on a certain date or when you die. Term insurance pays a lump sum if you die before a set date
term insurance. In its simplest form, it pays out a specified amount if you die within a selected period of years. If you
survive, it pays out nothing. It is the cheapest way overall of buying the cover you need. but doesn't pay out anything
if you survive the term. The term could be, for example, the number of years left on your mortgage or the number of years
until your children are financially independent. Level Term Life Insurance is sometimes called 'protection only'
insurance. An investment-type policy provides cover for as long as you live. Since the policy must eventually pay out, it
builds up an investment value that you can cash in by surrendering the policy. However, it takes many years for a surrender
value to build up and, in general, whole-of-life policies are an expensive buy if your main need is protection. As it is considerably
more expensive than the protection-only term life insurance alternative some advisers believe it's better to keep your
insurance and investment needs separate.
|
