The Importance of Life Insurance and the Various Types of Life Insurance Available in Malaysia

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1. Introduction Today, life insurance actually the one of everybody needs. As we know, it is a type of financial protection to anyone who bought it. Basically, life insurance is an agreement between insurance policy holder and insurer, where the insurer promises to pay an amount of sum assured to beneficiary upon the death of the life insured. In other words, an individual’s pure risk is shifted to insurer in the consideration of premium paid by the policyholders. The premium is either paid regularly or in a lump sum. The concept behind the life insurance is “repair the house before it rains”. It is common that we prepare an umbrella even it is a sunny day. By the same token, an individual will plan how to meet their financial obligation…show more content…
The role of life insurance in financial planning will be also covered in our assignment. A sound financial planning for an individual must not overlook the life insurance. The life insurance serves as the foundation of all financial matters as it provides protection for the individual’s dependents such as family in the case of premature death. No matter how good is the financial plan, without an adequate life insurance, it would be worthless after the owner dead. 1. Types of Life Insurance Policy I. Term Life Policy Term life insurance provides only a death benefit. This type of policy is for pure protection since it has no cash value component attached. As well, the insurance coverage for term life policy runs for a limited period of time and may be renewed at the option of the insured for as long as he or she is willing to pay the premiums. The beneficiary will be indemnified if the insured pass away or suffer total and permanent disability during the covered period. In addition, term life insurance can be bought for different time increment, such as 15 years, 10 years, even 30 years. The main advantage of term life insurance is saving on cost of insurance as it often offers lower initial premium compared to other types of insurance, especially for young people. Hence, term life insurance also known as an economical way to buy a large
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