Personal Insurance
What is ‘Term Life Insurance’
A policy with a set duration limit on the coverage period. Once the policy is expired, it is up to the policy owner to decide whether to renew the term life insurance policy or to let the coverage end. This type of insurance policy contrasts with permanent life insurance, in which duration extends until the policy owner reaches 100 years of age (i.e. death).These types of policies provide a stated benefit upon the death of the policy owner, provided that the death occurs within a specific time period. However, the policy does not provide any returns beyond the stated benefit, unlike permanent life insurance policies, which have a savings component that can be used for wealth accumulation.
What is a ‘Whole Life Insurance Policy’
A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component pays a stated amount upon death of the insured. The investment component accumulates a cash value that the policyholder can withdraw or borrow against. As the most basic form of cash-value life insurance, whole life insurance is a way to accumulate wealth as regular premiums pay insurance costs and contribute to equity growth in a savings account where dividends or interest is allowed to build-up tax-deferred. What is ‘Universal Life Insurance’ A type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element (like whole life insurance) which is invested to provide a cash value buildup. The death benefit, savings element and premiums can be reviewed and altered as a policyholder’s circumstances change. In addition, unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums. Universal life insurance was created to provide more flexibility than whole life insurance by allowing the policy owner to shift money between the insurance and savings components of the policy. Premiums, which are variable, are broken down by the insurance company into insurance and savings, allowing the policy owner to make adjustments based on their individual circumstances. For example, if the savings portion is earning a low return, it can be used instead of external funds to pay the premiums. Unlike whole life insurance, universal life allows the cash value of investments to grow at a variable rate that is adjusted monthly
DEFINITION of ‘Own-Occupation Policy’
An insurance policy that covers individuals who become disabled and are unable to perform the majority of the occupational duties that they have been trained to perform. This type of insurance policy is contingent on the individual being employed at the time the disability occurs. Persons not working at the time of disablement will not be able to claim insurance under an own-occupation policy but, if they are covered under a modified own-occupational policy, they will. Under a modified policy, the definition of disabled includes persons not working at the time of their disablement. These types of insurance policies apply to highly trained individuals, such as surgeons. Because the definition on own-occupation is very flexible, persons covered under an own-occupation policy may find another job and still receive full benefit payments.
What is critical illness insurance?
Critical illness insurance is a form of health insurance that provides a lump-sum payment should you become seriously ill. What are the types of illnesses covered by critical illness insurance? Although they differ from company to company, typical illnesses and diseases covered by critical illness insurance may include:
- cancer
- heart attack
- stroke
- blindness
- Alzheimer’s
- multiple sclerosis
- organ transplants
- kidney failure
- paralysis
Coverage can also vary according to the degree of severity of, or conditions associated with, an illness or disease. For example, if you are diagnosed with a type of cancer that is treatable and that results in minimal “down time”, you may not be eligible to make a claim. Coverage cannot be purchased for a pre-existing condition or illness.
