Life Insurance

When you hear the term life insurance, there are probably a variety of types of life insurance that cross your mind. Life insurance companies may ask you what type of life insurance policy you have at the moment, if any. If you live in South Africa, there are really two main types of life insurance policies to choose from:
Permanent Life Insurance
When it comes to researching “what is life insurance?” permanent life insurance is known by several different names. These types of policies can be referred as whole life insurance; variable; universal; indexed or even the equity indexed. But what do those names actually mean?
The difference in names simply refer to the way in which policies are structured and how they can earn interest depending on the amount of money the policy holder spends on them. All of these are classed as permanent life insurance and premiums for this type of insurance would be permanent.
Term Life Insurance
This is really temporary insurance coverage that lasts for the time specified in the policy. Typically term life insurance lasts from 5 to 30 years and when the insurer dies before the expiration of the policy, the benefits of the death are paid to a selected beneficiary. Should the policy expire right before the death of the policy holder, nothing is paid to a beneficiary as the policy is no longer valid.
Other Types of Life Insurance
We all need protection and life insurance is a way of sensibly planning for the future and ensuring that your family is protected in the event of your death. This type of insurance offers peace of mind that your family will receive financial assistance in the event of your disability or death. For example, the pay out from the policy could be used to pay off a home or vehicle. But it’s not just about preparing for your family’s future; it is also about getting the best possible cover for the best value for money.

Whole life insurance provides level premiums as well as life protection for as long as the policy holder is alive and provided that the premiums are paid regularly to ensure that the policy remains valid.
Universal life insurance is also a permanent policy that offers three components, namely: death benefits; expenses and a cash value component. This policy allows for more flexibility and the policy holder has the ability to modify the premium rate to accommodate for changing circumstances and needs in his or her life.

When deciding on a life insurance policy, take the time to carefully examine products to find the one that will best fit your needs and ensure that your family will have a secure financial future.


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