[ Tiramisu with TRSSEA - EP8: Life Insurance ]

So, What is life insurance?

Life insurance?is a contract between you and an insurance company. Essentially, in exchange for your premium payments, the insurance company will pay a lump sum known as a death benefit to your beneficiaries after your death.

There are two primary?types of life insurance: term and permanent life. Permanent life insurance such as whole life insurance?or universal life insurance?can provide lifetime coverage, while term life insurance?provides protection for a certain period.

Term Life Insurance

In addition to being the most affordable type of life insurance,?term life insurance?is generally the most popular type of life insurance sold.

Term life insurance provides?coverage for a certain amount of time and the premium payments stay the same amount for the duration of the policy. Typical choices are policy lengths are 10, 15, 20, 25 or 30 years.

If you pass away within the term of your policy, your beneficiaries can make a claim and receive the death benefit money, tax-free.

Once the term of the policy expires, you may be able to renew the coverage in increments of one year, known as guaranteed renewability. But each year of renewal will be at a higher rate.

Permanent life insurance

Permanent life insurance?provides lifelong coverage. It’s more expensive than term life because it:

• Can last for the duration of your life.
• Usually builds cash value.

The cash value component accumulates on a tax-deferred basis over the life of the policy. It acts as a savings portion of the policy. Typically, you can borrow against the policy’s cash value or make a withdrawal. If you decide to end the policy, you can get the cash value minus any surrender charge.

In some policies the cash value may build slowly over many years, so don’t count on having access to a lot of cash value right away. Your policy illustration will show the projected cash value.

Two timelines to note on the insurance contract:

Milestone 1: 21-day trial consideration for new customers. This is considered an insurance trial benefit.

During this time, customers have the right to consider, change, adjust some information, even refuse to continue to join the life insurance. If the customer changes his mind and does not continue to participate, the insurance company will refund the total fee paid, without interest, after deducting some laboratory and medical expenses (if any).

Therefore, the buyer should take advantage of the consideration period to review the information provided to the insurer; Read the rules, terms and other documents in the contract.

Milestone 2: Customers only receive benefits after the waiting period. Customers should note that not all insurance benefits are effective at the time the policy is issued.

Waiting period is the period from the time the insurance policy takes effect until the buyer is entitled to receive benefits if an insured event occurs. If the insured event occurs during the waiting period, the benefit will not be paid.

For example, customer A purchases an insurance plan on March 1, 2023. On March 20, client A had acute hepatitis and had to be hospitalized for a week. The treatment cost is 8 million VND - eligible on the policy for the insurance company to pay. However, customer A will not be compensated by the insurance company for this cost. The reason is that the customer's hospital stay is waiting period (in 30 days).

Therefore, the advice for customers is to read the contract carefully when participating in insurance, if there are questions, immediately ask the insurance company or the consultant for a satisfactory answer.

On the contrary, insurance businesses need to improve the level of consultants, strictly handle unqualified consultants, just to sign insurance contracts with customers. The insurance regulatory agency also needs to monitor the performance of insurers to protect the legitimate interests of participants.