Life

Life Insurance FAQ

1. What are the functions of life insurance?

Life insurance primarily serves to provide a death benefit to the policy’s beneficiaries according to the terms of the policy upon the life insured's death. This helps alleviate the financial pressure on the family in the face of misfortune and maintain their necessary living necessities. 

Some life insurance plans (such as whole life insurance) are participating policies that not only provide death benefits but also accumulate cash value for you through non-guaranteed elements, helping you achieve your financial goals.

2. What are the common types of life insurance?

The common types of life insurance mainly include Term Life Insurance plan, Whole Life Insurance plan, and Universal Life Insurance plan, each with different characteristics to suit various customer needs:

Term Life Insurance (Pure Life Insurance)

Term Life Insurance, also known as Pure Life Insurance, provides life coverage to the life insured for a fixed term. Common coverage periods include 5 years, 10 years, 20 years, or up to certain age etc.

Pure life insurance does not include any savings component and is a purely protection-oriented life insurance product. The benefit is that the premiums for the same coverage amount are generally lower than those for Whole Life Insurance (which includes savings components), with a simple and direct premium structure, but no cash value in the policy.

Whole Life Insurance

Whole Life Insurance, mostly are participating life insurance plans, provides lifelong coverage and includes savings components. Its coverage period is typically longer than those of term life insurance. In addition to life coverage, the insurance company also distributes non-guaranteed annual dividends or bonuses, which helps increase the policy’s cash value and offers the potential as a long-term wealth accumulation tool.

Universal Life Insurance

Universal Life Insurance also includes savings components and serves as a tool for wealth accumulation while providing protection. It is a relatively flexible life insurance product, characterized by the policyholder's option to adjust premiums, and change the coverage amounts based on their liquidity needs.

3. What are the things to pay attention to when comparing life insurance? 

When comparing life insurance, you may consider the following important factors based on your own needs:

Be aware of exclusions in life insurance

Like other insurance products, life insurance also has exclusions. If the life insured dies under the circumstances specified in policy terms and condition, no death benefit will be payable. 

Choose between pure life insurance or life insurance with savings components

When comparing life insurance, one major consideration is whether to choose pure life insurance or a life insurance plan that includes a savings component. The advantage of pure life insurance is generally that the premiums are relatively lower. You can consider the premium, coverage period, and death benefit amount based on your needs. For plans with savings elements (such as Whole Life Insurance or Universal Life Insurance), in addition to the basic factors mentioned above, you can also consider the cash value of the plan, guaranteed returns, or non-guaranteed dividend, the flexibility to withdraw cash value, whether your liquidity is sufficient, and the risk of the policy becoming lapse due to failure to pay premiums on time.

Calculate the suitable life insurance coverage amount

Regardless of whether you choose Term Life, Whole Life, or Universal Life Insurance, calculating the suitable life coverage amount is very important. The basic function of life insurance is to provide a death benefit amount that can provide financial support to the beneficiaries. Therefore, you should consider the household and living expenses of the beneficiaries to ensure that the death benefit amount of the life insurance policy can support their financial needs.

4. What are the common exclusions in life insurance?

Life insurance’s claims are generally straightforward.  Typically, after the life insured's death, the beneficiaries can receive the death benefit amount according to the policy term.

However, if there is any significant misrepresentation during the application, such as falsely reporting health conditions, concealing known serious illnesses, or lifestyle habits, the insurance company has the right to deny issuing the death benefit.

5. How to claim life insurance? 

If the life insured dies during the coverage period and does not violate any exclusions in the policy, the beneficiaries can receive the death benefit. To apply for life insurance claims, you generally need to submit a completed life insurance claim form along with the life insured’s and beneficiaries’ identification documents, as well as any claim documents required by the insurance company (such as the death certificate, marriage certificate, or birth certificate). Once it verifies that the life insured's death meets the policy conditions, the insurance company will make a lump sum payment of the death benefit amount to the beneficiaries through the designated payment method.