Life insurance can be a springboard to generational wealth because it provides coverage against major illnesses and can be used to protect the family’s income in the event of the death of a breadwinner, explains Othneil Blagrove, senior manager, sales, at JN Life Insurance Company.
The insurance manager explained that there are different types of insurance, such as whole life, universal, term life, critical illness plans and others, which are effective in offering protection in the event of an untimely death or a major illness. The senior manager explained that what differentiates insurance policies are their costs, purpose for which they are needed, or the requirements to access the policy.
“Term insurance, for example, is designed by life insurance companies to provide pure insurance protection for the temporary needs of the client, or where larger coverage amounts are needed and affordability is an issue,” he explained.
“It also has cheaper monthly payments and is the lowest cost for life insurance. Term insurance is also perfect for young people, and the premium remains the same throughout the life of the policy. The perceived drawback is that the policy eventually expires. Therefore, the duration should be long enough to cover your needs. Also, with exception of the JN Life Vest, term life insurance policies do not have an investment option,” he added.
He stated that whole life policies are permanent insurance which may also provide a cash value accumulation with guaranteed rates. He added that the same premium is paid throughout the life of the policy, while universal life offers long-term protection and also provides a cash value accumulation with variable rates.
Mr Blagrove emphasized that life insurance is beneficial because of the coverage provided to policyholders. These policies can be a launching pad for building generational wealth.
“Insurance plans, such as a term plan, may be used as protection in case of the death of the family’s income earner. The wealth passed on to the next generation would be protected because the death proceeds from the term plan would be used to cover the final expenses of the insured and thus his or her assets would be able to be passed on to beneficiaries,” he said.
“In the case of a critical illness plan, protection in the event of a major illness is provided, especially to the breadwinner, which can sometimes place additional burden on the family to find those extra funds to care for their loved ones. Life insurance on a whole is good to have because it prevents families from being burdened with huge expenses in the event of unfortunate circumstances,” he added.
Mr Blagrove explained that not all insurance policies were designed to assist with major illnesses, as some were crafted to provide assistance to families in the event of untimely death or unfortunate circumstances. He pointed out that insurance policies, such as term plans, whole life and universal plans were examples of policies that were designed for those situations.
“These policies, for example, a term plan, may not assist with illnesses since it only offers life insurance coverage and not critical illness insurance. Only JN Life has a term insurance plan with investment attached as an option. Since the term plan expires after a period, the investment built up over the period will assist the client to care for any need that he or she may have at that time,” he added.
“All the policies have benefits and disadvantages. As such, it is best to speak to your financial advisor to find out which policy is ideal for you. Also, you may have more than one product because you want to be able to reduce the risk of additional financial setbacks in the event of an untimely death or major injury,” he said.