Life insurance: often referred to as the last taboo, our own death--or that of a loved one-is so painful to contemplate that many of us leave life insurance to accident or fate. However, discussing and planning for it can give you and your relatives peace of mind.

AuteurDonnellon, Brien
Fonction Business: finance column

To ensure that your survivors are provided for financially in the event of your death, look at your existing cover. Life insurance can help to pay bills, continue a family business, pay for your children's education, protect your spouse's retirement plans or repay a property loan. In Switzerland, obligatory company pension provision complements the state insurance. The level of additional insurance cover is often left to the individual, unless a minimum amount is required to cover a loan. You may wish to provide enough cover to settle outstanding debts and fund funeral expenses. Insurance policies also include a beneficiary clause, specifying the person or organisation named as beneficiaries of your policy in the event of your death or another insured event.

Main types of life insurance policies

Protection policy: Following a specified event (e.g. your death), this policy provides a benefit, typically a lump sum payment. A common form is 'term life insurance' (for more details, see below).

Investment policy: This policy facilitates the growth of capital by regular or single premiums. To compare policies on price, ensure that each policy provides the same benefits for the same amount. Besides the death benefit, factors affecting the policy price include age, gender, profession, state of health and preexisting conditions. Smokers can expect to pay at least 25 per cent more. Participating in a dangerous sport can also increase the insurance premium or result in your application being rejected.

Main types of life insurance forms

Term life insurance: This type of agreement guarantees a specified lump sum to a named person or entity, should you die before the policy expiry date. The payout is subject to a few exclusions, such as suicide or other self-inflicted conditions. The most common type of term life insurance features a payout that does not change over the period. However, you may pay lower premiums for insurance of which the payout decreases over time.

Fund-linked fife insurance: This type of agreement allows you to combine insurance cover with the prospects of an investment in equities. Neither income tax nor withholding tax is payable on the returns under certain conditions, even for flexible pension plans. On maturity of the policy, you or your beneficiary receives the counter-value of your units in the fund. On your death, beneficiaries will immediately receive the guaranteed death benefit or the value of the units--whichever is more...

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