Unlike medical, property and motor
insurance, which are mandatory life insurance is optional. In some cases it is only
once couples start a family that this subject is properly reviewed.
With dependants comes the
responsibility of ensuring that they are left financially solvent when you are
no longer around. Income replacement, the amount you would have earned up until
retirement, is a large component of life insurance since the mortgage will still
have to be paid as will other bills long after you are gone.
But finding the right policy can be
quite tricky. The Cayman Islands Monetary Authority website/cimoney.com.ky,
lists 12 insurance companies that offer life insurance in the Cayman Islands.
There are three types to choose
from; term, whole life, or a combination of the two.
Term life insurance relates to
policies that cover a fixed period from anywhere between one to 30 years. If the
policyholder is still alive when the policy matures, neither they nor named
beneficiaries receive any benefits so the dividends are usually less than with
a whole life policy. Term life insurance does not have a savings component.
Conversely, whole life insurance
provides the kind of coverage that provides benefits, sometimes more than the
amount you paid out in premium, even if you outlive the expiration of the
policy. This type of policy has a
built-in savings plan and is often used as collateral against which you can
secure loans for big ticket expenses. Whether you decide to cash it in or
borrow against your policy is up to you and will be determined by your circumstances.
Because of the win-win scenario of
whole life insurance, also known as permanent life insurance (the savings plan
element accrues interest and dividends the longer it is in force), such
policies are considerably more expensive than term insurance.
Having grasped these concepts, a
reputable agent can help potential clients decide which type of policy best
suits their requirements and projected earnings. Your agent should be able to
guide you through the maze of options when giving you quotes.
There a number of first rate companies
in Cayman that offer life insurance.
Tony Mosley of Cayman Insurance
Centre has been selling policies for more than eight years. All his company’s
policies are portable in that coverage is maintained as long as premiums are
paid regardless of the holder still lives in Cayman or not.
He recommends that potential
●Think carefully about the amount of monthly or annual premium they
can comfortably pay. Too high a dividend may mean they are later forced to
allow the policy to lapse, which would be counter-productive.
●Make enquiries about the reputation of the company and the agent
they intend buying the policy from. Has it honoured past claims? How long
has it been in business? And is the company licensed by the Cayman Islands
Monetary Authority? The answers will give a reasonable indication of its standing
in the community and are fair indications as to how principled it is.
●When considering payment options find out if the company allows for
standing order payment and online banking. And whether it accepts
credit/debit card payments and post-dated cheques for ease of payments.
●Ask themselves why they are seeking life coverage and then have the
agent tailor make a policy accordingly. If it is to protect a young family
while they too are young, it is likely they will want to maximise their
coverage for each dollar spent. If this is the case they may consider a term
life policy, which covers them for more during the critical financially dependent
years of their family’s lives.
●Take note that different types of policies suit different
needs, different budgets and different perceived goals for specific
clients. Come to a decision based on the facts and options presented by
Determine what requirements they must meet to get
coverage approved in the first place (e.g. is a medical required for the policy? And
will the company pay for the medical expenses? Also find out the normal
turnaround time to get a policy approved.
●While they are relatively young and healthy try and get as much coverage
as possible at the best terms available. Bear in mind though that factors
such as whether they smoke, have health issues as well as gender, age and build
will affect the pricing of policies.
●Take care of their health and let their insurer know about it. If
they have stopped smoking in the past few years they should tell their insurer.
It may be possible to get life premiums adjusted. Smokers typically pay 50 per
cent more so these are significant savings. Moderate drinkers and those who are
not overweight and regularly exercise will pay less for coverage.
Armed with the basics; take the next step and commit to protecting
your family this year. There comes a time in many people’s lives where
they become “uninsurable” – so do not procrastinate, seek coverage and lock the
coverage and rates in while you can.