Life insurance is simply that’an insurance policy on your life. You purchase a life insurance policy from a qualified provider, paying them a premium. The premium is either paid monthly or in a lump sum (usually annually or every six months). The insurance company then agrees to pay an agreed upon amount of money after the insured person dies. The amount of money paid from a life insurance policy goes to the policy’s designated beneficiaries in a lump sum payment. If no beneficiaries are designated, then the payment is made to the estate of the deceased.
There are two basic kinds of life insurance: Term insurance, also called protection policies. These policies are temporary, providing coverage for a specific number of years for a set premium.
Term life does not build up cash value. You are just buying protection in the event of your death, and nothing else.
Whole life: These policies are also called permanent life insurance. The objective of whole life is to grow capital through the payment of regular or lump-sum premiums, while providing coverage in the event of death. This kind of coverage is also known as permanent life insurance. The premiums do not change, and there is a guaranteed cash value for the policy, which can be accessed whether or nor you die, for emergencies, vacations, retirement, or other expenses.
The kind of life insurance you buy generally depends on the goals you want your coverage to accomplish. Most people fin that term life suits their needs, making sure their bills are paid and their heirs receive some assistance after their deaths. Others want a reliable source of cash accumulating as they pay their premiums. Speak with a qualified agent to decide which kind of insurance is best for you.
The type of life insurance policy you need will depend on why you are purchasing the insurance and the goals you want the insurance to accomplish. Most people find that a simple term life insurance policy suits their needs, while others want to make sure their bills are paid and their heirs receive a settlement after their deaths. You can discuss your needs with a qualified life insurance provider in order to determine what policy is best for you.
A qualified life insurance agent can answer all your questions. He or she can help you customize coverage to meet the needs of your family.
Tom Martens is the content syndication coordinator at Lifeinsurance-Southafrica.co.za South Arica?s leading Life Insurance and Life Cover portal.
