We recently launched two new financial products on the Fincheck platform! This is really exciting because we can now help people make better financial decisions over a wider selection of finanncial products. We're going to start with a Life Insurance education series and follow that with a Funeral Insurance education series.
Help us to spread the helpful information to South Africans by sharing this article with your friends! Let's look at the types of Life Insurance you need!
2 Common types of Life Insurance
The exact benefits and payout will be determined by the provider of your life insurance, but typically there are 2 types of life insurance options in South Africa.
Whole Life Insurance
Whole life insurance is maintained throughout your life and covers you throughout your life. A portion of the policy (or premiums paid) will be invested and therefore this combo of investment and life cover is a more expensive option than the standard life insurance policy.
The only way to stop a whole life insurance product is when you pass away or when you "surrender" the life policy. By surrendering the policy, you are cancelling the policy and will be held liable for the fees associated with this step. The reason people do this is to access the cash value of the life policy. The negative side of this step is that you might not get the same value in your premium when you take out a new policy due to the increased health risks when you are older.
Term Life Insurance
As can be seen in its name, this type of life insurance policy only covers the insured person or family for a certain period. After this period, it needs to be renewed to continue the life cover of the product. This period is predetermined and can, therefore, be planned. Some people choose this option because they feel they can accrue enough money in this period to provide for their family in the case of their death and after this period, it's an unnecessary expense to maintain.
Term life insurance typically caters for some of the milestone timeframes in your life like buying and paying off a house. Compared to whole life insurance, term life insurance can be more affordable but come at the cost of little benefit and no investment or cash value when they end.
How to choose?
When you are looking at life insurance options, remember to keep factors in mind that are not as severe as death, but equally crippling in your ability to generate further household or estate income. This means you might consider a more comprehensive insurance option that covers a crippling disease or death, disability and even retrenchment.
We know the options for life insurance is vast and each person’s situation is different. So, we want to help you make the right choice. If you are looking for a life insurance partner, we encourage you to make use of our life insurance comparison page to apply & then compare the different life insurance partners and their basic options.
To your better financial future!