Life Insurance Guide

Have you ever thought about how your family will cope financially when you die? Even if you don’t have dependents, life insurance cover is important should a tragedy happen, such as an illness or an accident that leaves you disabled and unable to earn an income. Life insurance guarantees that your family will be cared for in these instances. It also means that any assets you leave behind will be protected. The chosen beneficiary for your life insurance policy will receive a sum of money that can be used to cover expenses like debts, education and even day-to-day living costs. 

There are two main types of life insurance: 

• Whole life insurance policy: With this life insurance, the policy holder pays a premium for the duration of their lifetime or until they reach the age of 100. This life insurance policy acquires interest and upon maturity (should you not die before the age of 100) the cash will equal to what the death amount pay out would have been. 

• Term insurance: This life insurance policy covers you for a set period of time. It is usually taken out while paying off a mortgage bond, so that you can be sure your mortgage will be paid off even if you should die or become unemployed. This type of life insurance has no accumulated investment value.

 Other types of life insurance policies cater for specific events that may occur in your life. These include:

• Funeral Plan Insurance: This life insurance provides cash in the event of the policy holder's death and can be used to pay for funeral costs. 

• Salary Protection Insurance: This pays you up to 75% of your monthly income if you become disabled or retrenched and are no longer able to work and earn money. The purpose of this kind of life insurance is to keep you financially independent and prevent you from becoming a financial burden. 

• Disability Cover: Also known as work disability cover, lump sum disability or lump sum income protection provides cash in the event that you become disabled and can no longer work and therefore earn an income. 

• HIV Life Insurance: Even if you are HIV positive, you should still have life insurance cover in order to provide for your family. The cash that your beneficiary will receive from your HIV life insurance policy can cover expenses like debts, education for your children and day-to-day living costs.

When taking out life insurance, remember:

1. Take out only the life insurance cover you need

Get quotes from different insurance companies to ensure that you only get the life insurance cover that you need in your specific circumstances. Review your cover regularly because as your circumstances change, such as having more children or taking on a more dangerous job, your life insurance cover needs will also change.

2. Premiums depend on individual circumstances

Various risk factors are taken into account when calculating your life insurance premium, such as your gender and your age. Women are considered less of a risk and thus pay a lower premium than men. The younger you are, the more likely you are to pay less for your life insurance. Your lifestyle, such as whether you smoke, travel regularly to dangerous regions, your family health history or whether you have dangerous hobbies like rock climbing, can also play a role in how much your life insurance premiums will be.

3. Have a beneficiary

Your beneficiary is the person that you have nominated to receive the life insurance policy pay-out in the event of your death. Having a beneficiary ensures that the money is left to someone you trust and know will protect your interests. You can also nominate a secondary beneficiary in case your primary beneficiary predeceases you.

Get life insurance through ThinkMoney with just three easy steps. Simply enter your details, get quotes, and then select the best life insurance option that gives you maximum coverage and costs savings. Or, if you want to know more about life insurance products in South Africa, read our life insurance reviews from other customers. Alternatively, read more about our various life insurance products including salary insurance, funeral insurance, HIV insurance, diabetes insurance, hospital cash insurance and family insurance.