Kinds of Life Insurance Policies in South Africa
There are many different kinds of life insurance policies. For instance, term life insurance is when you take out term life insurance and your life is safe for a pre-number of years.
Before you start calculating how much coverage you need, decide on what type of life insurance will meet your needs.
You’ve got choices, some of which are whole life insurance, term life insurance and universal coverage. Some people try to research these different life insurance policies on their own and eventually rope in the services of a life insurance broker to provide them with information.
Different kinds of life insurance policies
- Term Life Insurance – Your insurer will cover you for a set amount of years. Term life insurance is the original form so because of its an old type of life insurance; it’s not complicated to understand such as the new generation life insurance products of today. It’s the most inexpensive way to purchase a significant death benefit.Once the Period expires, the insured person can either forgo the cover or get more cover. It’s a good option if you think that you only require insurance coverage for a short period. These policies are typically available for 10, 20 or 30 years. Once you pay the plan off, they don’t have investment value. Some people don’t like the idea that coverage ceases at the end of the term. If however, It’s during the duration of the policy, the insured dies, the policy will pay out to their estate. The main reason people buy term life is that they want to provide cover for financial responsibilities for the insured’s beneficiaries.
- Whole Life Insurance – This kind of life insurance policy is more comprehensive. They call it Whole Life because it covers you indefinitely or until you want to cancel the policy or stop paying your monthly premiums. People appreciate it because it offers a guaranteed payout. The Insured person pays a premium right up to the time that they die or until they surrender the policy. The policy builds up cash value. The insured can then borrow money against the policy. Premiums are higher than a term life policy.
- Universal Life Insurance – this is a whole life policy with an investment option. For every premium payment you make over, and above the amount, an additional cash amount is put into your account.
Premium Based on Size of Benefit
Life insurance allows one to pay a premium in return for the insurance company to pay out a large sum of money in the event of the insured person’s death. The premium is based on the size of the benefit provided. It’s based on thing such as the likelihood of a claim during the life of the policy.
There are many kinds of life insurance policies. Before purchasing a life insurance policy, take into account the financial situation you want for your dependents. Whenever you experience a major life event, you should be taking a look at your life insurance policy again so that you have ongoing peace of mind.
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All info was correct at time of publishing