LIFE INSURANCE BASICS

KNOWING WHAT QUESTIONS TO ASK
Here are a few questions you need to ask when acquiring a Life Insurance policy. Feel free to do so in conjunction with your Sagicor Advisor.

Do I need life insurance?
If you have financial obligations including a mortgage, children’s education or household support that would be jeopardised if you were to die, then you should consider life insurance. 

How does it work?
Most life insurance works on the same premise – you make payments or “premiums” to an insurance company that guarantees to pay your chosen beneficiary a sum of money upon your death. 

What does it cost?
The cost depends on the amount and the type of insurance you purchase as well as your life expectancy. There are insurance products to suit just about any budget. 

What are the different types?
There are four major types of life insurance. 
1. TERM insurance is often the least expensive. You buy it for a specified term and usually have the option to renew, probably at a higher premium. If you die during the term, your beneficiaries are paid the amount of the policy. If you are alive when the term ends, there is no pay-out. 
2. WHOLE LIFE insurance combines a death benefit with a savings plan. Part of the premium you pay goes towards building cash value. Premiums are fixed and once they are paid the policy will remain in force for your entire lifetime. If you die, your beneficiaries are paid the amount of the policy. 
3. UNIVERSAL LIFE is a variation of whole life insurance and offers flexibility in the amount of coverage, rate of savings accumulation and the payment of premiums. 
4. ENDOWMENT insurance provides a benefit if you live to a specified age or will pay your beneficiaries a benefit if you die before the policy matures. Cash values accumulate at a higher rate than with Whole Life but the monthly premiums are higher as well. 

How much insurance do I need?
Every household has unique insurance needs and it’s important to work with a Sagicor Advisor to determine your exact requirements. Tips: 
1. Consider purchasing insurance to cover the cost of your home mortgage in the event of your death, disability or critical illness. 
2. Improvements in medical care and public health have increased life expectancy and many people now live longer in retirement. Consider a life annuity to protect you from outliving your resources in retirement.  

 Here are some of the factors that are taken into consideration when a needs assessment is performed. 

 

ASSESSING YOUR LIFE INSURANCE NEEDS 
​Sample Insurance Needs Assessment ​US Dollars
1. Covering Debts​
Mortgage​ ​$50,000
​Loan ​$20,000
​Other debts (e.g. credit cards) ​$3,000
​2. Providing income for family and dependents
​To replace your income and cover their needs for 10 years ​$500,000
3. Preparing for future events that you intend to save for​
Children's education​ ​$100,000
​Improvements to your parent's home ​$50,000
4. Final and funeral expenses​ ​$15,000
​5. Current disposable assets
Cash and savings​ ​$23,000
Investments (e.g. mutual funds)​ ​$41,000
6. Existing Life Insurance​ ​$200,000
Minimum additional life insurance requirement
(1+2+3+4-5-6)​ ​$474,000
 

Tip: Be sure to discuss settlement options with your Sagicor Advisor​. These options determine how someone with a policy pay-out can opt to have the funds disbursed, for example in a lump sum, through an annuity or held in trust.