Life Insurance FAQ
Q: What is life insurance?A: Life insurance is a financial resource for your loved ones in the event of your death. You enter into a contract with an insurance company, which promises to provide your beneficiary(ies) with a certain amount of money upon your death. In return, you make periodic payments, known as premiums. The amount of the premiums generally depends on factors such as your age, gender, occupation, medical history and whether you intend to build up cash value in your policy. Some policies may require a medical exam.
Certain types of life insurance may also provide benefits for you and your family while you're still living. Such policies accumulate cash value on a tax-deferred basis that can be used for future needs such as supplementing your retirement income or helping provide for a child's education.

Q: Do I need life insurance?
A: There is no law that says you must have Life Insurance, but many people do consider it a vital aspect of financial protection. It can provide some financial peace of mind if the worst were to happen. Many people simply want it to help provide a tax-free lump sum for their family or relatives if they were to die

Q: When should I buy life insurance?
A: When to buy life insurance depends more on your individual circumstances and your personality than on any hard-and-fast rules. There are good arguments on both sides of the issue.
Buy now
Life insurance premiums increase dramatically as you get older. If you buy permanent life insurance while you're younger and (presumably) healthy, you can take advantage of lower rates. Your premium costs may increase, but these increases are strictly regulated. Cash value life insurance also offers a type of "forced savings," and the policy accumulates tax-deferred over time. Buying while you are younger provides the added advantage of extra time in which the cash value can grow.
Buying life insurance while you are younger can be especially important if you are in a high-risk group for any disease or medical condition that might make you uninsurable. If you choose to buy insurance for this reason, ask about adding a guaranteed insurability rider to your policy. This rider guarantees you the right to purchase additional insurance at specified times, without having to provide proof of insurability. This way, if you get married, start a family, or take on other responsibilities, you can purchase the insurance you need without worrying about whether you will be denied coverage.
Buying term life insurance while you are younger has certain advantages as well. Like cash value insurance, premiums for term life insurance increase significantly as you get older. By buying now, you can lock in low premium rates for the duration of your policy. If you choose to purchase term insurance, look for a policy with a renewability provision. This clause allows you to renew the policy without having to take a medical exam or prove insurability. However, your premiums will likely increase each time you renew your policy as a result of your decreased life expectancy.
Buy later
Instead of buying life insurance now, you might decide to put off this purchase until later, perhaps when you have a family and more responsibilities. For the time being, you may want to put that money into other types of investments that have the potential to provide greater returns.
In order to fully reap the benefits of this strategy, you must have the financial discipline to invest your premium savings on a regular basis. Or, instead of depending on your own ability to faithfully invest each month, arrange for funds to be automatically transferred from your bank to the investment account of your choice.
Keep in mind, however, that while this strategy provides the potential for investment returns, these returns are not guaranteed. In addition, it would be unwise to delay purchasing any life insurance if you have children or other dependents who would suffer financially as a result of your premature death.
Q: Can I do anything to lower the cost of life insurance?
A: The price you pay for life insurance depends on your age, your health, and your lifestyle. So if you are older, you have health problems, and you are a smoker, you will always pay more for life insurance than someone who is younger, healthier, and a nonsmoker. That being said, there are ways to lower your life insurance premiums, even if you fall into a higher-risk category. COMPASS can assist you in devising the right plan.

Q: What about the beneficiary?
A: Most commonly, policyholders will name their spouse and/or their children as beneficiaries of their life insurance, with other family members an option for the unmarried and childless. Beneficiaries are not limited to family - a business partner is also a popular option.

A joint-life policy is a popular and often less expensive option for couples which covers the two of them simultaneously. This type of policy may be in a first-death form - where the benefit is paid out on the death of the first of the two to die to the surviving partner - or a last-survivor form, where the benefit is paid to the beneficiary, usually the children, after both partners die.

Spouses may also take out life-of-another policies on each other; a husband may take out insurance on the life of his wife, and vice versa. Life-of-another policies require that you prove an insurable interest in the person whose life you are insuring; however, spouses are assumed automatically to have an insurable interest in each other's lives.

Q. Which optional extras are important?
A. You should consider adding Critical Illness Cover, Waiver of Premium and Indexation to your Life insurance policy. Terminal Illness cover will be included in your policy free of charge.

Q. Can I use an existing life insurance policy to cover the mortgage?
A: Yes, A mortgage is just one of the many financial obligations you should consider when determining how much life insurance you need. The mortgage company usually won't require you to buy additional life insurance to cover the mortgage, as long as you have enough insurance to cover all of your financial obligations

Q. Why consult COMPASS Financial Services
A: We are an independent and unbiased intermediary, offering products and services that are best for you, not for us. We search the market to find the best suited solution for you.
We have a qualified team that will tailor make as per your requirements and assist you in the finalizing on the solution from our blue chip associations.

Important Disclaimer: Answers on Insurance advice are not a substitute for professional advice. For reliable information of any sort you must consult an officially qualified Professional Advisor.