Following the outbreak of the novel Coronavirus pandemic, there has been an unusual high demand in the applications for life insurance.
The saddest thing that could happen to a grieving family is to suffer a financial crisis after the death of their breadwinner.
Many persons who do not want to leave their families financially crippled in the event of their untimely death, have begun scouting for insurance options that offer their loved ones financial comfort while mourning their loss.
According to MIB life index, the many deaths recorded due to COVID-19 Pandemic has prompted many applications for life insurance.
However, Barbara Ginty who is a certified financial expert and host of the “Future Rich” podcast has warned against panic application to insure one’s life when one has no real need for the policy.
Speaking to CNBC, Ginty said “I only would recommend buying life insurance if you have a need for life insurance,”
The business news channel compiled a list of necessary questions to ask before filing for life insurance;
- Will there be a financial hardship for your loved ones if you pass away?
- Do you have a spouse, partner or child depending on your income?
- Did you buy a home with a spouse or partner that is based on two incomes?
- Did a parent co-sign a student loan that will not be discharged if you die?
If your answer to any of these questions is yes, you are right to apply for life insurance.
You should know that there are two types of Life insurance
- Term Life Insurance
- Permanent Life insurance
Term Life Insurance
Term Life Insurance covers a certain period of time ranging from 10-30 years. If any mishap happens during this period, the insurance policy covers it.
However, when the specific period elapses, insurance company will not be liable to cater to the financial needs of the insured’s family.
Experts advise parents who are raising kids and those who have mortgage to opt for this plan.
Permanent term
This insurance policy is the umbrella to three other policies Whole life, Universal and Variable life.
Permanent term guarantees the insured a payout throughout their entire lives, unlike Term life that only covers a certain period of time.
According to Investopedia, permanent life insurance combines a death benefit with a savings portion.
The earnings derived from permanent Life insurance are tax-deferred and are otherwise called ‘cash value’.
Barbara Ginty advised persons with estate or inheritance taxes to opt for this policy.
She also said the policy would be ideal for people who need long period of time to cater for dependent loved ones such as a child with special needs.
Nevertheless, the insurance expert warned prospective life insurance applicants to be aware that the perks of permanent Life policy come at a cost.
They are highly expensive which could be the reason many insured miss payment while majority totally abandon it.
A Permanent Life insurance could be ten times more costly than Term life insurance.
CNBC quoted Ginty saying, “Term insurance provides the most coverage for the least amount of money, allowing most people to continue to work toward other more fun goals like buying a house, saving for vacation, saving for retirement — I swear this is fun — and paying off student loans,”
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