What is a Life Insurance Deal?
Insurance is a common word. Many people don’t know exactly it means. That is although they may have a rough clue. They know they can insure their possessions, for example, cars, phones and other belongings. But at the very least they should close a life insurance deal too.
Not as common, especially in South Africa, is life insurance. Well, people don’t know much about what a life insurance policy is and its significance.
Life insurance is probably the most important type of insurance. Obviously, it is insurance you take on your life or someone else’s. It makes perfect sense to ensure your car or your phone as the cover will enable you to replace what you have lost. On the other hand, a life insurance policy cannot promise to do the same. But those who have lost a loved one who had a life cover policy can testify that it does have its benefits.
A life insurance policy mainly involves three parties: the owner of the policy, the insured and the insurance company. The owner signs a legal contract with the insurance company. The contract states that, once the insured dies the beneficiaries of the policy receive a payout from the insurance company. This payout usually goes to help in funeral expenses, any outstanding debts and future needs that the beneficiaries may have.
There are two main types of life insurance: this first and most popular is the Term Life policy.
Term Life Insurance Deal
This policy is usually active for a specified period of time – usually about 20 or 30 years – after which it expires. During this period, if the insured passes away, then the beneficiary of the term policy is entitled to a payout; but if the insured outlives the policy the beneficiary gets nothing. Despite the huge risk that one has to take with this policy, it is the one that most people prefer probably because the expiry date of the policy seems a long way off in hindsight and the premiums for a Term Life insurance policy are very affordable.
Whole Life Insurance Deal
The other policy is the Whole Life policy. This one expires when the insured has passed away, therefore guaranteeing that the beneficiary of this policy walks away with something. Unlike the Term Life policy, its premiums are very high. However, they do not have to be paid in one huge lump sum but can be paid in installments. This policy also allows you to invest in it, adding value to it and at the same time raising the amount that the beneficiaries are entitled to when the policy eventually expires.
Whereas a Term Life policy expires and can be renewed, a Whole Life policy can be cancelled and its owner can cash in earlier than he anticipated. This usually happens when he/she is in urgent need of the money which he/she had earlier invested into the policy. But what a lot of life insurance companies do is charge a hefty penalty to those who do this in order to discourage it. With this new knowledge of life cover, you can now confidently go ahead and ask for life insurance quotes.
Next step: Add your contact details to the form and submit it to get a quick life insurance quote
All info was correct at time of publishing