With life insurance, it is important to determine the amount of coverage that you need as well as the type of life insurance that you need. There are three life insurance types to choose from in South Africa, which are term, whole and universal life insurance.
It is always a good idea to seek advice from a life insurance broker as they will be able to guide you through the types of life insurance and help you to choose the best one based on you and your family needs as well as the level of coverage that you need.
So, let’s take a closer look at these three options.
Term Life Insurance
Term life insurance is the most affordable life insurance that you are able to get and offers cover for a set period of time that is determined before you sign for the policy. This can be a great option for those that are only looking for a short or limited cover and during major times of your life. Term life insurance policies are generally offered for 10, 15 or 20 years.
Term life insurance is just insurance and doesn’t offer the insured any other type of value once the policy has been paid off like the other two types. So, once the term has ended for the policy so will the coverage.
If the insured passes away during the term of the policy then the policy will pay out accordingly to their estate.
Whole Life Insurance
A more comprehensive type of life insurance is whole life insurance that offers a guaranteed pay out. This type of policy will have the insured pay on the policy until they die or decide to surrender the policy. This then means that the policy will start to build up a cash value as the insurer is investing these premium payments. When the insured dies, the policy will pay out to their estate.
The premiums that are paid for whole life insurance are usually higher than that of term life insurance, but with whole life insurance, once the policy has been paid for long enough it earns a cash value and the insured is able to borrow money against the policy.
Universal Life Insurance
The last type of life insurance that you are able to get is universal life insurance, which is like a whole life insurance policy with an investment option.
This means that when you pay more than what is required, i.e. more than your premium, the additional cash is invested and can start to earn interest. Universal life insurance can then create growth on this investment.
When you are looking for life insurance it is important that you compare quotes and to also get quotes on all three types of life insurances, so that you are able to make the best decision possible based on your needs. An easy way to compare life insurance quotes is to use an online service that will find you the best life insurance offers from reputable companies and allow you to compare them all at once in terms of coverage, type and premium. You are also able to seek the advice of a life insurance broker that will be able to gather you quotes.