According to recent statistics from the Centers for Disease Control (CDC), more than half a million Americans have died from the coronavirus pandemic. Since mortality is on most people’s minds who provide for their family, life insurance policies provide a solution.
Buying the insurance is vital, although the advantages and disadvantages can vary depending on your term life, premiums, and death benefits. When buying a term plan in Singapore, consider all the merits and demerits to make the right choice. Here are the advantages and disadvantages of life insurance.
Pros of having a life insurance
i. Peace of mind
Thinking about your demise might be uncomfortable but knowing your loved ones are financially secure gives you peace of mind. Your loved ones will receive the payout, also known as the death benefit. The death benefit can be used to pay for your children’s upbringing, tuition, funeral expenses, paying debt, or paying the mortgage.
ii. Tax benefits
Death benefits are tax-free, unlike your retirement proceeds. For instance, there are additional tax benefits if you have a whole life insurance policy and continue paying the premiums. Some of the premiums will accumulate as savings with an insurance policy, and they are tax-deferred.
iii. Savings when you need it
If you choose permanent, you can access the cash value by borrowing or withdrawing it. However, the available amount and tax consequences will depend on your chosen insurance plan. Also, you can save the cash value to supplement your cash savings. Therefore, you can enjoy the money you pay as a premium whenever you want.
iv. Financial protection
Although you will pay premiums, a life insurance plan provides financial protection to your family for unforeseen expenses. The death benefit is paid as a tax-free lump sum, unlike any money your family receives as inheritance or estate. Sometimes, the legal processes and hefty taxes can make it hard for your family to receive an inheritance. Therefore, buying life insurance is ideal to protect your family financially when you die.
Term plans in Singapore are cheap enough to fit most budgets. Depending on your age and the plan you need, you can pay as little as $20 per month in premium for term life insurance. If you want to reduce the premium further, you can lower the coverage amount and term length. You can save a lot of money by buying life insurance early enough, unlike buying it later in life.
vi. Easy application
Nowadays, you can shop and buy a life insurance policy online from reputable companies like MoneySmart. By visiting their website, you can get free quotes, learn about their plans, ask questions and choose the plan that suits your needs.
Cons of having life insurance
i. Another expense
A life insurance policy is affordable if you are healthy or young. Some factors determine the premiums, for example, your style, age, medical profile, and family medical history. Therefore, companies charge you a higher premium if a factor increases the possibility of dying early. If you are unhealthy and incur hefty medical bills, buying a policy is another expense you do not need.
ii. It is easy to be misled
When it comes to life insurance, there are many questions. For example, when can you redeem the money? Which is a reliable insurance company?
And what happens when you die and the company you chose contests your death! Choosing the right company and plan is vital with all these questions in mind. However, research failure can cause havoc because you can be misled. MoneySmart is a reputable company that helps its customers determine the best plan.
Regardless of how hard it is to think about, death is a fact of life. Therefore, while you cannot predict your death or the future, you can plan for your loved one’s well being. By buying life insurance or increasing your existing coverage, you guarantee the financial security of your loved ones.
Though it is an additional expense, you will enjoy peace of mind knowing that your loved ones are financially protected. Take your time to choose a reputable insurance company and plan to reap huge benefits. Finally, visit MoneySmart to learn more or ask questions about the available term plans in Singapore.