When you have little ones to think about, choosing the best life insurance cover for you and your family becomes all the more important.
Derek Wilson, Head of Hippo.co.za sheds some light on the different types to choose from.
“If you don’t have dependents, you might not need life insurance, but you may need disability or dread disease cover. And if you aren’t in debt, life insurance can form an inheritance for your loved ones,” he says.
“Many think that life insurance is an unnecessary expense as the person paying for it will never benefit from a pay out. But life insurance cover is important for those with dependents or businesses. When it comes to life insurance, there are various things to consider,” Wilson adds.
7 Types of life insurance cover to consider
- Whole-of-life insurance cover lasts for the entire lifetime of the policy holder, and although payments will cease after retirement, the cover will remain in place. This type of cover has a guaranteed payout benefit, better future value and the policy holder is able to surrender or cash-in at a future date and can also borrow funds against this cover.
- Fixed-term life insurance cover enables you to choose from cover for the next 10, 15 or 20 years. If you die after the term has ended, you probably won’t be paid out. This cover is ideal for homeowners who wish to have their mortgage costs covered should they pass away.
- Decreasing-term life insurance is a type of cover where the premiums and the payout decrease over time. It’s most likely that your homeowner bond payments will decrease over time, and decreasing-term life insurance makes sure that you’re not “over-insured” on your bond amount.
- Universal life cover is an option for those who wish to add an investment component to the cover. For every premium payment made, some of the money is invested, which means that the policy will most likely have more value in the future.
- Credit life insurance covers against debts such as personal loans, credit card debt and vehicle finance loans. The policy will cover your debts in the event that you should pass away so that your family will not be burdened with debt.
- Renewable-premium life insurance is based on the unpredictability of future health circumstances and increases by a specified amount at a specified time. The policy holder’s cover is renewed based on their specified increased amount without them being requalified in order to remain covered.
- Age-rated life insurance increases as you age. This means that the premiums will become more expensive in the long-run, but initially you will be paying the cheapest premium.