Is Cash Back Life Insurance Worth It?

Getting a cash back life insurance policy is the latest rage. The life insurance industry introduced this new way to buy life insurance because research indicated that people were sick and tired of paying premiums on whole life policies decade after decade without getting anything back.

Outsurance was the first to market the innovation on the back of its short term business. That business also offers cash back where there are no claims in a specified period.

Outsurance took a fair amount of market share away from life insurance companies. The large companies simply offered a whole life policy with no cash back option. The other life houses responded by offering similar cash back deals on whole life policies.

Cash Back Life Insurance

So is it worth getting a cash back life insurance policy?

Consider the following before switching your life policy or buying into this new form of insurance.

  • It is untested in South Africa. Because payouts occur after many years (typically 10 years) we do not yet know how the insurance companies will calculate the payout or how long they will take to pay.
  • A cash back insurance plan is not an annuity or an equity investment. That is, given the uncertainty about how it will be in reality. That is especially where disability or other aspects relate to the insurance plan.
  • Any generous offer from a insurance firm always means higher premiums. They have to carry theCash Back Life Insurancerisk of their promise and the only way to do this is through higher payments from their customers.


More Considerations

  • One should compare a cash back plan to a non-cash back plan to prove the veracity of this. It might be worth it to take the difference in premiums between the two types of policies. Then invest it in Satrix or a unit trust.
  • If you are interested in this form of life insurance, ask your present life insurance company if they can amend your existing policy to a cash back system. You might get a better deal that way.
  • Life insurance is NOT an investment. It should cover what you will owe in the event of your death and also cover the needs of your beneficiaries.  To rely on a cash back life insurance policy when planning your child’s education, for instance, is an untested area.
  • If you want to know more about cash back insurance policies, contact an insurance broker for help.


IMPORTANT: Make sure you have a lawyer or an informed third party read the cash back life insurance policy details before you jump in and sign. All that glistens is not gold!


Next step: Add your contact details to the form on this page, then submit it to request a life insurance quote.



All info was correct at time of publishing