Everyone wants to provide for their family. For many, there is deep uncertainty about their family’s well-being when they are no longer around. For centuries, we have saved, invested, and attempted to ensure a stable flow of income for our families to survive after we are gone.
This is also why insurance policies can be a sensible way of securing the future of your family.
As defined by Oxford Languages, it is insurance that pays out a predetermined sum of money after a fixed period or when the individual who has taken the policy is no more.
This gives rise to the question – what kind of life insurance plans should one choose?
There are many insurance companies out there, and the top insurers offer their customers transparent information and guidance in choosing one that fits them best.
This article will examine one aspect of life insurance plans: guaranteed vs. non-guaranteed life insurance.
What is guaranteed life insurance?
Guaranteed life insurance plans guarantee that the cover remains valid as long as the insured person is consistent in paying their premiums on time.
The policy will not be considered lapsed unless the insured individual misses a payment.
This also means that there is a guarantee on the insurance premium that the insurers collect. There will be no fluctuations to the premium.
Another advantage of guaranteed life insurance is that the insurance company does not get permission to access the individual’s health and medical records. The insurers do not ask the customer to furnish details of their health conditions.
Make sure to ask your insurer about the waiting period. Most insurers do not provide the insured individual’s family with the plan’s full benefits if the individual is no more. Many companies require a waiting period of about two years. This differs from insurer to insurer.
This isn’t necessarily a problem. It isn’t that your family will receive none of the money. It is that they will not receive the full amount they may have been entitled to. They would receive the full amount if the waiting period finishes before the insured individual’s passing.
Your family will still get a payout of the insurance premium that has been paid and, depending on the insurance company, a certain amount of interest as well.
Generally speaking, premiums tend to be a little higher due to the nature of guaranteed life insurance plans. Take the time to ask your insurer about the other costs involved when they show you plans that could be suitable for you by using a life insurance premium calculator.
What is non-guaranteed life insurance?
Non-guaranteed life insurance plans are limited-term insurance policies. There are a few things you need to know about this type of life insurance plan.
Non-guaranteed life insurance premiums will fluctuate. This means that your premium amounts will be different at different times. For example, you may be required to pay a fixed premium for two or three years, after which the premium is dependent on the market.
In most cases, this means that your premiums will become more expensive over time.
If you pay more for your premiums, do not expect added features or benefits, the benefits will remain the same as when you purchased the life insurance plan. With this type of life insurance plan, your premiums are invested in the market. That is the reason why premiums fluctuate based on market conditions.
Which life insurance plan do I choose?
This isn’t the easiest question to answer. Understand what your income looks like, what it is forecast to be during the tenure of your policy.
Know what all your commitments are and so on. It really does differ from person to person.
A guaranteed policy tends to be more risk-averse than a non-guaranteed life insurance policy.
Take the time to sit down with your trusted insurer and use a life insurance premium calculator to get a clear understanding. Also, understand what costs are involved and what the risks are.
Take your time picking life insurance plans and choose an insurer that has a reputation for being transparent.