Buying life insurance isan important financial decision that every person. It ensures lost incomecovered and supporting the family financially until they get other sources ofincome when policyholder meet financial trouble in emergency case.
Many people failto purchase insurance because they consider it an expensive undertaking.However, with the term policy insurance has made it become more affordable topublic. When the term has expired, you are liberty to renew the policy, but ifyou choose not to renew the policy you will able to access the benefits oncethe term matures. Term insurance policyholder will benefitsto obtain cash benefits if they diagnosed with terminal illness.
This give thepolicyholder an opportunity to use the money cater for treatment among otherexpenses and helps to cushion loved once by saving to pay high medical cost.Therefore, term policy is recommend for people who have a short time to live.For further explanation, let looks out some of the features for term insurance. 1. Termlife only provide pure death benefit Entire purpose of a termlife policy is the death benefit.
Term life insurance will only give a singlelump sum of payout as death benefit to the person or entity that you designatedas your beneficiary when the policyholder is die. This payout can used as thefuture income for the beneficiaries to maintain their life before that theydepend on the policyholder. By comparing premium and coverage with other typesof policy, term life insurance policy would pay policyholder a very high coverfor very low premiums to help beneficiaries of policyholder reduce the burdenson financial difficulties. Unlike whole life insurance, it provides both thepermanent protection and the cash value. If you want to get return from insurance,you may consider the whole life or investment link life insurance. Below arethe essential overview of term insurance for death benefit.
Death benefit the whole purpose that youhave a life insurance policy to payout an amount of money to your beneficiary.Term is an amount of time, period of a time that the price of your policycannot change. No matter what happens with your health, or anything like that,the face value of the amount of money that the policy will payout as the deathbenefit if you were to pass away and finally your beneficiary is who gets themoney if you pass away.2. Thepremium paid will increase in accordance with ageThe premiums of term lifeinsurance always increase every year. This is because of the escalating risk ofdeath as the policyholder ages increases.
All the life insurances will face theproblem of mortality but the difference is the whole life policyholder onlyneed to pay level premium throughout the policy as the one he paid initially.If you consider the level premium, the whole life insurance is suitable topurchase. Disadvantages for term policyholder that only want the temporarycoverage of protection. 3. Nocash value providedTerm life insurancecannot accumulate wealth like investment link life, whole life and variablelife insurance. When the term policy is expired, there is no more protectionunless you renew the policy. The premium paid is functions to claim the deathbenefit for beneficiary.
It is pure life insurance without providing cashvalue. If there is no death occurs, the insurer will not give any payout. Onthe other hand, it is cheaper than whole life because it only provideprotection on specified term and no cash value given. If you consider a cheapand coverage life insurance, term life insurance is the most suitable. 4. Fixedamount paymentWhen youentered a term policy contract, you need to pay a fixed amount of premium untilthe end of the maturity to ensure your beneficiary get coverage when the timepolicyholder has passed away. The value of the policydoes not change over time during the term that you have chosen.
For example, 20years term policy priced at RM40.00 per month would stay RM40.00 for 20 years.
Insurance company could not change the price on you no matter what happen toyour health or anything like that until the end of maturity. It does not risewith inflation or any other type of measure for many individuals. This type ofcover is ideal keep in mind that this type of life insurance is also a termpolicy. This means that the policy is in effect for a specific length of timeas defined in policy terms. Term life insurancepolicies contain seemingly countless provisions, clauses and options the policyis always renewable premiums are fixed calculated. As a term life insurancepolicy it represents contract between the insurer and insured, premium is fixedbased on age of issue.5. TaxDeductibleThe features of term lifeinsurance is eligible for tax deductible.
Term insurance has protection byLembaga Hasil Dalam Negeri (LHDN) under sections 33 and 22 Income Tax Act,1967 and exempted from Goods and servicetaxes (GST) based on section 5 of the Insurance Act, 1996. Tax relief for term life insurance is RM3,000because the premium paid on medical policies or education policies. Tax relieffor term life insurance can combined with approved retirement funds likeEmployees Provident Funds (EPF). The requirement for tax relief is must filledin Borang BE to claim it from income tax. Based on the real facts, tax relieffor insurance is limited to maximum amount of RM6,000 no matter is claimed byqualified individual or spouse relief.
For example, if Deen paid RM4,500 forinsurance and RM3,000 for his husband, the total amount of tax relief isRM6,000 which is the maximum amount limited by Life Insurance Association ofMalaysia. If they opt to make a separate assessment, both Dylan and his husbandentitled to RM6,000 tax relief for insurance individually. 6.
Enablesto buy adequate cover due to affordabilityNowMalaysia can help you to build a policy ideal for your life circumstance. Term life insurance premium is 3 to 4 times cheaper thanother types of life insurance available in the market. Everybody can affordsuch a policy and continue throughout the term. Thus, it does not matterwhether you are 30, 50, or even more than 80, you will always find a preferableone for your needs. Even before a policyholder converts the term insurance intowhole-life insurance, the policy will be more expensive. The coverage offeredby a standard term insurance policy and that by a convertible policy may be thesame.
However, the convertible insurance plan will have higher premiums, owingto the built-in cost attributed to the conversion facility.You shouldbuy a convertible policy now if you are unable to afford whole life insurance.In the future even if you are able to buy whole life insurance, your health maydisqualify you from doing so.
In effect, you choose the affordable insurancenow while also creating a path to the lifetime option in case your insuranceneeds and health condition changes over time.