Category: Life insurance

Death is inevitable, but your family going into debt does not have to be. The passing away of a beloved family member can be extremely traumatic and come with the added financial stress of having to manage a household on a reduced income. This financial stress may even be made worse by lingering medical debt.

It can be extremely reassuring, knowing that your loved ones are financially taken care of in the event of your death. Life insurance cover can help by providing your family with the financial means to maintain their lifestyle, continue with their education, pay off your medical debts or other liabilities such as your car loan or home loan.

A life insurance policy is a type of insurance that pays out either a lump sum or monthly instalments to your chosen beneficiary after your death. Your beneficiary is usually a trusted member of your family who will be responsible for ensuring that your life insurance payout is used appropriately.

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Preparing for the inevitable

There are some things that we cannot prevent from happening, so we must do our best to prepare for them. Preparing for your family's life after your death may seem morbid or unsettling; additionally, the overwhelming amount of information and insurance policies on the market can make the decision-making process tough.

Here at BudgetGist, we believe that people should be given all the tools they need to make an informed financial decision; so, we have created a handy guide on everything you should know about life insurance. That’s why we pride ourselves on being South Africa’s information hub for all things related to finance and money.

Types of life cover

Traditionally, you will pay life insurance premiums and your life insurance policy will remain in place until your death. Some insurers may only insure you up to a certain age, in other words, your family may not be able to claim on your life insurance if you pass away over a specified age. This age is usually ninety-five but may vary depending on your insurer.

Besides this age-related clause, traditional life insurance is usually the most comprehensive type of life cover and almost guarantees a payout for your family. Additionally, you may be able to decide on the finer details regarding your life cover payout such as the total amount, and type of payout.

The only downside of traditional life is that the insurance premiums can be higher than other types of life cover.

There are a few other types of life cover on the market that are dependent on your age, risk factors, and marital status.

High-risk life insurance

Understandably, one of the main factors that insurers look for when considering your life insurance application is the amount of risk you pose. You may be deemed high risk if you have pre-existing medical conditions or terminal diseases.

Additionally, the following lifestyle factors may be assessed to determine your risk: dangerous hobbies such as sky-diving, detrimental habits such as smoking, and whether your job entails high-risk activities or situations.

Mortgage life insurance

Your home loan repayments can make up a considerable chunk of your expenses each month. In the event of your death, this major responsibility will fall on your spouse or children. Mortgage life insurance absorbs this responsibility by paying off your remaining mortgage amount after your death.

Depending on your insurer, mortgage life insurance could be added to your existing life insurance policy. This type of insurance may be suited to people who have a large mortgage value or would feel more secure knowing that their home loan is guaranteed to be paid off in full.

Life cover for your dependents

You can take out a life insurance policy on behalf of your parents or minor children. This type of cover may suit people who have parents that are financially dependent on them, or people who would like their children to be insured as well. Elderly people may not be able to pay traditional life insurance premiums, whilst minors may not qualify at all.

Life cover for people over 50

Getting life cover when you are older can be more challenging. Many insurers may not offer you a traditional life insurance policy due to your age as you pose a higher risk of dying. Additionally, you may not pay as many premiums throughout your remaining lifetime compared to a younger client.

What do you need to know?

Term life cover

Broadly speaking, there are two categories of life cover which are term insurance and whole life insurance. Term insurance only provides cover for an agreed amount of time. After this time period has passed, any claims made will not be valid. On the other hand, whole life insurance provides cover indefinitely and is guaranteed to payout upon your death.

Which insurance company offers the best life cover?

Life cover should be personalised to your financial situation and lifestyle. There are many insurers offering life insurance such as 1st for women, Discovery, Momentum, Sanlam and 1Life.

Whether you are looking for life cover for over 50's, cover on behalf of your parents, or traditional life insurance cover, be sure to shop around for quotes. Websites, like BudgetGist, can help you narrow down your options.

Life insurance claims

Life insurance claims can come with strict approval processes. Many insurers will require information from your beneficiaries before processing a claim. This may include your death certificate, and possibly information regarding your death such as medical records, police records and relevant legal documents.

Both you and your beneficiaries must understand how your life insurance claims process works. When consulting with an insurance broker, make sure that the claims process is explained to you in a manner that you can understand.

Don't be afraid to ask questions or clarify terms and conditions that seem complicated. Additionally, take note of all the documents required to make a claim, as well as the circumstances under which your insurer will not payout.

Life insurance versus Funeral cover

It can be easy to mix up life insurance and funeral cover when you are looking around for quotes. There are a few key differences you should be aware of when deciding to take out an insurance policy.

Funeral cover refers to an insurance policy that pays out a lump sum of cash to your family to cover the costs of your funeral, burial, and other cultural or religious ceremonies. Funeral cover is a once-off payment and some funeral insurance companies may even pre-allocate funds to certain expenses such as catering or the chosen funeral home.

On the other hand, life insurance usually has a larger payout value. For this reason, life insurance claims have a stricter and longer processing period. Life insurance may pay out a lump sum of cash, monthly instalments, or annuities.

Do you really need life insurance?

Would your family be able to comfortably maintain their lifestyle and continue with their education or other major life events if you were to suddenly pass away?

Your life cover payout will allow your family to continue their normal lives and give them the time and space to grieve. A life insurance policy is peace of mind that money can buy!

It is important to know what you want out of your life insurance policy. It can prevent you from paying excessively high premiums and your family from having to deal with complicated claims processes! With various life insurance companies in South Africa, you can find the right life insurance policy that suits your family's needs and your budget. Luckily, BudgetGist is here to help! We are South Africa’s information hub for all things related to finance and money.


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