01/15/2024
. Types of life insurance. Term, whole, universal, variable and burial life insurance. Pros and cons.
- Term is the most common and cheapest and the main purpose is to replace your income when you die so that your loved ones don't suffer the financial burden. Usually for a term of 1, 5, 10, 20 or 30yrs depending on your working years left. Premiums increase significantly at renewal due to age and risk factor
- Whole life insurance. For those who want a straightforward policy and can afford the higher premiums. Typically last your entire life as long as you keep up with the high but fixed premiums. Typically more expensive than term life insurance.
- Universal life insurance. Best for people who want permanent life insurance and can adjust to future needs. This type allows you to adjust your premiums within limit and has a cash value component that grows based on market interest rates. Your premiums increase over time. It is usually less expensive than whole life insurance and can be adjusted based on your changing life needs. The downside is that the death benefits and cash value growth are not guaranteed.
- Variable life insurance. Best for those with a higher risk tolerance who want control over their cash value investment. This type of life insurance is tied to investment accounts such as bonds and mutual funds. Premiums are usually fixed and the death benefits are guaranteed regardless of how markets fare. There is a potential for great gains if the backing investments do well. The downside to this insurance type is that it requires you to manage the policy because the cash value can change daily depending on markets.
- Burial life insurance. This is a small whole life insurance. This type is for people who want to cover their own funeral, burial and other end of life expenses after they pass on. Coverage is usually capped between $5,000 to $25,000
- Social insurance schemes. In Canada and the United States, Cameroonians run social insurance schemes geared at helping repatriate the remains of an individual after their passing. In Canada, there is RPN (Retour au Pays Natal). In the US there is SAGI.
With RPN, member's families receive a sum of $20,000 after their passing to help with repatriation and funeral costs. I think SAGI handles the repatriation and pays the bereaved family a sum of $5000 to help with funeral costs (not sure about SAGI payout amounts). With both schemes members pay less than $1 each time a member passes on.
Shop around for a good life insurance to get the best possible premiums. Talk to your financial advisor and or different financial institutions.
Are you a member of RPN or SAGI? Do you currently have any of the life insurance policies mentioned above? Do you know a good insurance policy provider with good premiums? Please share so we can benefit from it. I am currently shopping around for Whole or Universal life insurance.