Life insurance plans offer financially protection to people who have lost an important member of the household. Usually the bread winner of the family and people who have dependants opt for this type of insurance since the family of policy holder’s receives a compensation amount after the policy holder passes away due to a natural death or due to an accident. Listed below are types of life insurance plans offered to buyers who want to insure their life.
Term Life Insurance
This type of insurance plan protects the policy holder for a limited time and the policy holder can choose if he wants to be insured for 5 years, 10 years or up till he is 99 years old. As of now, the term life plan is the only type of insurance plan offered to buyers in Australia.
Disability income insurance
Some insurance companies also offer this type of insurance plan to buyers who have opted for life insurance policies. Disability income insurance protects buyers financially if they cannot work due to permanent disability. Some insurance companies also offer partial disability plans. Usually disability income insurance is offered as an additional plan and buyers have to pay additional premiums to enjoy the benefits of this type of policy.
Short term and long term plans
Based on the tenure of the policy life cover plans can be categorized into short term plans that last for 10 years or lesser and long term plans that last for 15 years or more. Short term plans are ideal for buyers who are in between jobs and buyers who are above 60 years of age. Long term plans are ideal for buyers who are certain that they want their families to be protected financially for a long time, who do not want to renew policies frequently, who have dependants and who are 40 years or younger.
Before buyers choose the type of life insurance plan they want, they should decide if they want to pay premiums monthly or yearly. Buyers should also decide if they want to pay levelled premiums and enjoy the initial low interest rates or pay stepped premiums and pay a fixed amount every year. Buyers should remember that life insurance plans are extremely useful and it is always better to select a plan with a higher cover than required. Financial advisors often advise buyers to opt for a plan that covers up to 20 times the buyer’s income.