What is life insurance?
It is a policy that the breadwinner or both partners purchase from an insurance provider, like Momentum or FNB, to plan for the family’s future. If one of the policyholders dies, the beneficiary will receive a lump sum of money from the insurance provider. The money is there to replace the income that is a loss, due to the loved one’s death, for a whole while or at least till the family is stable enough to survive on their own.
How does one know how much life insurance coverage is enough?
You should take time and work out what are your monthly expenses, mortgage, daily needs and more for you to survive on a monthly basis. Then you know put all in all together for a few months or years, and that will be the coverage you take out for your family.
What types of life insurance is available?
Whole life cover
It is a policy that will stay intact for your entire life, in other words as long as you keep paying your monthly premium up until the expiry date of your plan, you will be covered. Even if you reach the age of a hundred, you will be included. The coverage amount on this policy can be millions. Thus the monthly premium is a bit more pricey than term life insurance.
Term life cover
It is a policy that will stay intact for a certain amount of years, the term you choose to have cover for. Usually, individuals accept terms between five and thirty years but keep in mind that you can outlive this term after-which you will no longer be covered. You can choose to renew the policy or change it to whole life cover.
What can the money be used for?
- Pay off debt
- Pay off mortgage
- Pay for education fees
- Daily needs
Anything the family needs or want, they can use this money to buy it.
What and who is the beneficiary?
A beneficiary is a person the policyholder chooses to whom the money of his or her insurance pays out too. Usually, the recipient is the person closest to the policyholder like a spouse, kids or parents. You can have more than one beneficiary for one policy. The money will be divided as stated within the life insurance contract.
The conclusion to life insurance
It is essential for all families to have some financial plan in place to take care of your loved ones financially when you are no longer in the position to do so. Visit this link for more information about life cover and why you need it!