The most basic definition of insurance is that it is the transfer and distribution of risk. A contract is entered into between the insurer and the insured and this agreement should be clear about what it is that is insured and the risk involved. The amount payable should be made clear, along with the amount of the premium payable by the insured and the period of the insurance.
There are various types of insurance products, such as car insurance, home contents insurance or buildings insurance and life insurance.
Life insurance comes in two main forms:
Term life insurance
This is a policy that lasts for a fixed period of time. If you live longer than the policy term, there is no pay-out. This type of insurance is often cheaper, and more people sign up for it as a result.
Whole life insurance
This policy is designed to last as long as you do. When you die, the policy pays out a lump sum to your beneficiaries. You are required to pay a monthly premium.
With life insurance, the more protection your policy offers, the higher your premiums.
Comparing life insurance vs funeral cover:
Life insurance pays out bigger amounts, while funeral cover amounts are generally designed to meet the basic costs of a funeral. Funeral cover pays out more quickly and provides funds for costs leading up to and including the burial.
Life insurance can help you settle any debt. It will help your family become free of debt, It can also provide an income for your family in the event of your death.
Life insurance can be very cheap if you are healthy.
With life insurance, a lump sum can be paid to beneficiaries. A key benefit of life insurance is asset protection.
Funeral cover requires a valid death certificate to claim and pay-outs are fairly straightforward. Lump sum pay-outs can also be made.
For many people who are comparing the merits of life insurance vs funeral insurance, it’s important to make sure that they are clear about which type of cover will meet their specific needs.