Why Comprehensive Life Insurance is a Must for Young Couples Planning a Family
Comprehensive life insurance must not be forgotten when starting a family. It is a crucial pillar of financial security for young couples beginning their family-planning adventure.
Life insurance protects you and your family financially from unfortunate circumstances. We cover the reasons why all young couples should consider it.
What is comprehensive life insurance?
Comprehensive life insurance, commonly called "whole life insurance," offers protection for the insured individual for their whole life as long as premiums are paid. This insurance provides a payout by giving your loved ones a lump sum payment if you unfortunately become Total and Permanently Disabled (TPD) or pass away.
It also considers the financial objectives of you and your family and provides the option to access the policy's cash value through loans or withdrawals.
Whole life insurance often has higher rates than term life insurance policies due to its lifelong coverage and guaranteed premiums and payment. Policyholders are guaranteed that their premium amounts will remain constant and won't increase during the policy. Premium payments are necessary to maintain coverage and benefits.
How does life insurance work?
Life insurance protects your loved ones by offering any financial assistance they might need in the event of your passing. However, the level of coverage you purchase will determine the amount of money paid out. Therefore, it is essential to understand how it functions before buying life insurance.
The two primary types of life insurance are term life and whole life insurance. In contrast to whole life policies, term life insurance offers coverage for a specific time.
Both types are available to suit a variety of requirements and preferences. Still, when choosing a life insurance policy, it all boils down to considering your financial status, ambitions, and family needs.
Life insurance vs medical insurance
Sometimes, people assume that life insurance is unnecessary if they already have medical insurance. However, there are differences in the functions and types of coverage provided by life insurance and medical insurance (health insurance), as illustrated below:
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Life Insurance |
Medical Insurance |
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Purpose |
Ensures your family’s financial security if there is untimely death or total and permanent disability. |
Covers any medical expenses, such as doctor visits, hospital stays, medicine, and treatment, incurred as a result of illness or injury. |
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Types |
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Coverage Period |
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Renewed annually |
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Premiums |
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Payout |
TPD benefits are paid to life assured and death benefits are paid to beneficiaries upon the life assured’s death. |
Covers medical expenses |
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Tax Relief |
Eligible |
Eligible |
Why should young couples consider comprehensive life insurance?
Young couples may consider getting life insurance as they start building a life together, which will likely involve a joint property, car, assets, loans or mortgages, and other substantial costs.
If one partner passes away without life insurance, the surviving spouse is left on their own to pay these costs, which can be overwhelming. Hence, life insurance may help reduce these financial obligations and provide much-needed financial support during a trying time.
Here are a few reasons young couples should consider purchasing comprehensive life insurance.
Guaranteed protection for your family
Life insurance beneficiaries will receive a lump sum payment if one or both partners pass away unexpectedly. This money may be essential for meeting ongoing costs such as rent, food, daycare, and other necessities.
If you have children, life insurance can assist in securing finances to help with everyday expenses and even college tuition.
Your family's financial security is greatly enhanced by life insurance, which also expresses your love and concern for your family's future.
Income replacement
The foundation of a family's financial security is their income.
If one partner is the main income provider, their passing can leave the remaining partner struggling to make ends meet. The family's financial health may be significantly affected, jeopardising their way of life and long-term financial objectives.
This can be avoided with life insurance as the security of the family's finances is ensured, which helps restore that lost income.
Cash value growth and dividends
A minimum interest rate on the cash value portion of life insurance plans is guaranteed. As a result, the cash value is guaranteed to increase gradually over time, giving the policy's financial advantages a solid base. The insurance company's profits might be distributed as dividends to whole-life policyholders.
These dividends can be utilised to boost the cash value growth or withdrawn as cash. Young couples can use it to pay bills, save money, make investments, or even put money toward their retirement plan. The dividends received are regarded as a return of premium and are exempt from income tax.
Tax-free payouts
Besides offering loved ones financial security, life insurance is a worthwhile financial instrument since it delivers tax-free payouts.
For instance, the lump sum death benefit paid to beneficiaries upon the insured’s passing is typically received tax-free.
Also, policyholders can access the cash value through loans or withdrawals, which are generally tax-free.
Debt settlement
Life insurance can assist in paying off your mortgage or other obligations if you have any. By doing this, any outstanding debt won't fall on the surviving partner. The life insurance payout can be used to pay off whatever bills the couple may still owe, like credit card debt, auto loans, or education loans.
Help maintain living standards
Life insurance can help keep the family's living standards by providing the essential money to meet continuing costs, such as groceries, utilities, transportation, and student loans.
The resources you need will be close at hand, allowing you to handle these urgent costs without putting yourself under more financial hardship.
It also ensures that the children’s needs are still being addressed, promoting a stable and caring atmosphere.
Short and long-term financial planning
A comprehensive life insurance plan can also be used as an investment tool. A cash value may be available under some plans, which may be used to meet various financial requirements or removed entirely.
Short-term planning has several advantages, including instant financial security, covering for current needs, restoration of lost income, emergency fun supplements, and tax-efficient rewards.
Long-term planning, however, allows flexibility in premium payments, wealth creation and preservation, asset diversification, and estate and legacy preparation.
How to choose comprehensive life insurance for young couples?
When purchasing comprehensive life insurance, young couples must take several considerations into account. Here is a step-by-step manual to assist you.
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Step 1: Evaluate your financial condition by considering your income, debts, regular costs, and other factors.
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Step 2: Determine the coverage you'll need to protect you and your loved one's finances.
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Step 3: Decide the length of time you require coverage. (i.e. choosing between term life and whole life).
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Step 4: Analyse your financial capacity, like allocating premium costs to the amount of life insurance you can afford.
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Step 5: Learn more about any significant riders or policy provisions.
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Step 6: Read and examine insurance documentation thoroughly, paying particular attention to coverage amounts and monthly payments.
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Step 7: Consult with a Wealth Planner for personalised advice based on your financial condition and aspirations.
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Step 8: Ask questions and seek clarifications from your Wealth Planner.
Comprehensive life insurance to consider
Prudential's complete life insurance is an option for young couples to explore. It is a well-known and renowned insurance provider that provides various all-inclusive life insurance solutions.
PRUWealth Enrich
A legacy planning focus like PRUWealth Enrich ensures that your wealth will be distributed to your loved ones according to your wishes, provides your family with the highest level of security, and gives a bigger payout.
This plan provides:
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High coverage with great value for money
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Complimentary increasing coverage up to 50%
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Up to 500% coverage for accidental death
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Multiple loyalty rewards along the way
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Up to 20% insurance charge discount when you choose higher coverage
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Freedom to pay at a pace that suits you
PRUWealth Enrich is a good choice for young couples looking to begin laying the groundwork for a solid financial future.
PRUWith You Plus
PRUWith You Plus focuses on comprehensive coverage that protects the family. It pays out a lump sum if the life assured passes away or is Total and Permanently Disabled (TPD).
The benefits offered:
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Income Protection
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Convertible to Investment-Linked Plans
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Customisable coverage
PRUFirst
PRUFirst is a starter insurance package for young adults under 30. Moreover, it covers Medical, Accident, Life/ Total and Permanent Disability (TPD), and Payor Benefits.
This affordable plan offers a 5 in 1 coverage that will protect you until age 60. It's also customisable because you can strengthen your policy with additional riders based on your need.
PRUFirst is a straightforward, all-inclusive protection solution that can meet the requirements of young couples.
Conclusion
Young couples should consider getting insurance to maintain their financial security, protect their loved ones, and ensure they have the resources necessary to accomplish both short- and long-term goals.
Check out the different products for young couples from Prudential and consult with an adviser or agent for additional details.