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The lowdown on life insurance

Last update - Thursday, March 12, 2009, 18:53 By Metro Éireann

You and Your Money with Ademiniyi Adelekun

Fate can be very cruel. While death is a certainty in life, and we all know we will die at some point in time, nobody knows when – and it could happen to any of us or our loved ones much sooner than we wish.
At a recent conference I attended, someone gave a heart-rending talk about his experience dealing with the families of those who lost their lives in the 11 September 2001 terrorist attacks on the World Trade Centre in New York.
The speaker recounted how the life insurance plans that some victims put in place helped hugely in providing for the financial needs of the loved ones left behind.
A life insurance policy is a plan to pay certain benefits – most times a lump sum of money – to the beneficiaries of the policy holder if he or she should die during the term of the policy.
If adequately and sufficiently prepared, a life insurance policy will ensure that the financial needs of the beneficiaries of the deceased are taken care of.
One can imagine the feeling of appreciation that the beneficiaries of the deceased would have, knowing that he or she did really care for them by making provisions for them if he or she were to die unexpectedly. They will forever be grateful.

Life insurance policies can be taken out with most insurance companies. The life policy is often set for a specified length of time, called the ‘term’ of the policy, and a regular premium is paid out (mostly monthly, but sometimes annually) as a contribution to the plan.
The benefit – that is, the lump sum payable to the beneficiaries of the policy – is always agreed between the policy holder and the insurance company at the start of the plan.
It is very important that this benefit is adequately considered to ensure that it is appropriate and sufficient for both the financial situation of the policy holder and the intended beneficiaries.
The benefit derived from a life policy always outweighs the contributions to it, and a life policy is best taken out while the policy holder is younger, as the age and health of the policy holder impacts on the premium to be paid. In this regard, the sooner one plans for the future, the better.

Ademiniyi ‘Niyi’ Adelekun is the principal at Alpha Royal Financial Services in Galway. He writes for Metro Éireann every fortnight

This article is a general description of situations and circumstances. Please consult a financial adviser for personal advice that would take your specific circumstances into consideration

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