Question: I have read some articles recently about life insurance policies but have not seen any mention of the extra benefits that may be available. I would like to know what such benefits cover and why they are important?
Answer: There is a wide variety of life insurance policies available on the market, and within these there may be a choice of additional benefits. Which of these benefits, if any, will be appropriate for you will depend on your own personal situation and requirements, and would best be discussed with an independent financial adviser.
An increasingly popular choice of benefit is one that pays out a sum of money in the event of a person having a serious medical problem, such as a heart attack, stroke or cancer. This is generally known as Critical Illness Cover, and may be included in some life insurance policies, although some companies also offer it as a completely separate policy, known as "stand-alone" cover.
The sum of money paid out can be used as you wish, but it is often especially useful to provide replacement income if you find yourself out of work for an extended period, or even permanently. It could also pay any expenses that are not fully covered by medical insurance.
Unable to work
Permanent Total Disability cover can also be added to some policies, from which a sum of money is paid out in the event that you are permanently unable to work, due to accident or sickness.
Hospitalisation Benefit provides a fixed amount of cash for each day you may spend in hospital - up to 365 days. The maximum benefit is usually 75 per cent of your gross weekly earned income.
Accidental Death Benefit provides a sum of money, in addition to the normal life cover under the policy, in the event of death solely through an accident, while Dismemberment Benefit pays out a lump sum of money in the event of accidental loss of sight or limb.
Professional help
Long Term Care Benefit provides payment in the event that you are unable to take care of yourself after the age of 65 years. This is measured by the inability to carry out several so-called acts of daily living, such as dressing and bathing. The money paid out should provide you with enough to pay for professional help with self-care.
Another benefit that may be available is one under which the policy premiums will be waived by the company if, due to disability, you are unable to follow your chosen occupation for a continuous period of at least 26 weeks.
Family Income Benefit provides a regular income for your family for a selected period of years from its implementation, which is payable in addition to the lump sum they will receive as part of your life insurance policy. This benefit often acts as a "top-up" amount for young families where the children are still reliant on their parents for financial support.
The above list is by no means exhaustive, but certainly highlights a number of the main extra benefits available on most life insurance policies. In order to take advantage of any of these benefits, and to ensure that the most appropriate ones are chosen, with the right amount of cover, it would be advisable to discuss them in detail with an independent financial adviser.
The author is a Chartered Insurance Broker, at Nexus Insurance Brokers LLC, one of the leading financial advisers in the region. Opinion expressed here is author's own and do not necessarily reflect the view of Gulf News. If you have any question, please e-mail to advice@gulfnews.com. You may also visit www.nexusadvice.com
