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Frequent
Asked Questions
1.
Why do you need Life Assurance?
Life assurance should be an essential part of every person's lifespan
plan. Upon death and disability or sickness and/or retirement, life
assurance provides financial income to yourself and/or your beneficiaries.
It may also provide safety net to pay off your personal debt so that
your dependents are not burdened with additional financial obligations.
It's
a plan of good conscious and a financial safety net in times of unexpected
death, disability, sickness and retirement. An important feature of
life insurance is that the amounts paid to you or your beneficiaries
are not subject to income tax.
2.
How much Life Assurance do you need?
You should base the amount of life assurance on your current financial
and your family's needs. You could ask, "How much current financial
obligation do you have? How much does your family need to protect them
in case of your death/disability, sickness, and retirement?" The following
are some considerations and determinants: -
- Immediate financial
obligations upon death - final medical expenses, funeral costs, and
estate taxes.
- Funds to cover
life adjustments for survivors - previous debt, cost and time of job
search and/or possible re-location.
- Ongoing expenses
- monthly bills, rent, mortgage, school tuition, day-care, medication,
day-to-day basics, and retirement needs.
- The number of
years and income would be needed by your dependents
- The standard
of living you would like your dependents to have
- The amount of
outstanding debt you would need to pay off
- Other sources
of income that would be available to your dependents
- What your dependents'
future educational needs will be. An often-used general guideline
is that your life insurance should cover 5 to 7 times your annual
income. It is also good idea to frequently review your needs in relation
to your policy since adjustments are needed, your policy can be reviewed
accordingly.
3. What
should you consider if you want to replace your current policy?
Changing from your current policy to another is an option and your
right, but may not provide you any significant advantage. Chances are
you will pay a higher premium for a new cover - if only for the fact
that you are older or your health has notably changed. A better alternative
may be to ask about additional options or riders to your current policy.
4. When should
you purchase Life Assurance?
The best time to purchase life assurance is usually determined
by the individual. Usually, it is now! ---- If it has not been done
before! If you feel you have people you want to protect, or a significant
debt you wish to avoid passing on to your family - related to death,
disability, medical expenses and or retirement - then you should purchase
a life cover now! It is never too early to plan for the unexpected.
Depending on the type of policy you choose, it would be a good means
of contributing towards a fund you can draw on sooner than later.
5. What
do you need to consider when naming your beneficiaries?
Be explicit when naming a beneficiary. Name a contingent, or secondary,
beneficiary as a precaution, in case you outlive your first beneficiary.
Occasionally, at least annually, review your designated beneficiaries
because you may have married or had another child in the family or one
of the beneficiaries may have changed his or her name or address.
6. Can
you get Life Assurance if you have a pre-existing medical problem?
It depends on what the illness/medical condition is. The material
facts will be elicited through a medical examination report from any
of our medical examiners. Today, it is often likely that pre existing
medical problems be controlled with treatment, prescriptions, and diet.
We will take these factors into consideration.
7. Can
a Life Insurance Company cancel existing policy if policyholder develops
a serious illness after he/she is already insured?
No, a life insurance company cannot cancel an existing policy due to
the onset of a serious illness. However, benefits can be denied if it
is determined that a policyholder knew they had the disease prior to
applying for the insurance and misrepresented or concealed the fact(s)
in their application.
8. Are
the premiums and maturity proceeds for life assurance policy tax-deductible
and not subject to income taxes?
Yes, but if your employer pays your premiums, your benefits will generally
be taxable as ordinary income. Generally though, there are reasonable
tax-incentives for long-term insurances, both in premium and maturity
proceed terms, as there are incentives for pensions purchases.
9. What
happens if you can't continue paying your premium payment?
You have the option of suspending premium payment, or subsidizing your
payments with policy bonuses, if any. If you take the first option,
then your policy options would be: -
- Paid-up insurance
- in this option, you can use the cash value to purchase an insurance
policy with a lower death benefit.
- Extended term
insurance - you can use the cash value to buy a term policy death
benefit equal to that of the original policy.
- Receive the
cash value - you can receive as a single or as instalment payments.
- Utilise the
30-day grace period on your policy in order to arrange for payment
before your policy lapses.
10. Can
a Life Insurance Company refuse to pay death benefits if the policyholder
knowingly provides false information?
Yes, a life assurance policy is generally invalid if the policyholder
knowingly provides false information to the insurance company and dies
within two (2) years of receiving the policy. However, the false information
has to be 'material' to the decision at the point of issue the policy.
Hence, mistakenly providing the wrong address will not invalidate a
policy, but not disclosing a pre-existing medical condition could.
11. Are
employer-sponsored group disability insurance policies "portable" i.e.
can you keep your coverage even if you lose your job?
No, most group disability coverages are not "portable". So, when
you leave your employer or the group, you lose the life assurance -----
hence, the reason for purchasing your own individual life assurance
covers while still working.
12. How
are policy loans treated?
When a policy loan is taken, loan interest is charged, usually
at market rate, from the date of the loan to the next policy anniversary.
Each year on your policy anniversary, you will be billed for the annual
loan and interest, based on the outstanding loan balance. If the interest
is not paid, it will be added to the outstanding loan balance on your
policy. If the policy has an outstanding loan at the time of your death,
this amount will be deducted from the death proceeds.
13. What
questions should you consider in borrowing against the cash-value of
your policy?
If borrowing against the cash value of your policy is an option,
here are the things you need to consider: -
- Is there a limit
or restriction on the amount of the cash value I can borrow?
- What is the interest
rate?
- How quickly do
I have to repay the loan?
- Can my bonuses
be applied to the payment of the loan?
- What is the
effect of my loan on the surrender value or maturity or death benefit?
14. What
is the difference between the Term Life Assurance and Permanent Assurance?
Term Life Assurance provides protection for a specific period of
time, and pays benefits only if you die and/or become disabled during
the time in which your policy is in force. Permanent assurance provides
lifelong benefits as long as you continue to pay your premiums. Term
assurance coverage, however, ends at the completion of the term, and
since premiums increase periodically, may become too expensive to continue.
The premiums for Permanent assurance remain constant for the rest of
your life. Permanent insurance also builds cash-surrender values, while
term insurance does not.
15. What
are "Real-Life-Stories" that justify purchase of life assurance cover?
- Final Dignities
- A terminal and critical illnesses like cancer can take away ones
dignity. A man diagnosed with a terminal illness with an appropriate
insurance cover will receive death benefits in advance to live the
remainder of his life comfortably and take advantage of the time he
has.
- Easing a Tragedy
of a Widow - The value of insurance after a tragic car accident that
takes the lives of her husband (and oldest even a son) can leave a
widow devastated. Life Assurance death proceeds will ease this tragedy.
- Keeping a roof
over their heads and Renewing hope for life - A surviving mother with
a terminal disease ensures that finances for her remaining family
are secure. Her husband's unexpected death does not cause her unending
financial grief.
- Preserving a
legacy - Accelerated benefits from a life assurance policy provides
steady income for a family and help pay costly medical bills and will
enable a dying a man to fulfil his life's greatest dream.
- Making a difference
and easing a family tragedy - Through maintaining a safety net and
carefully investing the life insurance proceeds to enable survivors
to maintain the standard of living without acquiring debt.
- Health Insurance
at a small price - Health insurance helps a woman overcome a costly
heart transplant, giving her new hope for the future and A small price
indeed for, say, a child and/or whole family's need for medical care.
For further information
contact
info@cannonassurance.com
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