Tuesday, December 10, 2013

Life Insurance in South Africa

Death is a fact of life. Once you die, you will no longer be able to provide for your loved ones. By taking out a life insurance policy now, while you still can, you will be able to make a significant contribution to the ongoing financial well being of your family, even after you have gone.

How does life insurance work?

When you take a life policy, your insurer undertakes to pay out a predetermined sum to one or more beneficiaries of your choosing upon your death. This is in return for a monthly premium.

The cost of the premium will depend, in part, upon how much cover you choose.

What can a life insurance payout be used for?

The insurer pays a cash sum upon the death of the insured, which the beneficiaries are free to use however they see fit.

However, there are some clear immediate and longer-term befits that make this sum particularly useful. The most pressing financial obligation your family faces upon your death will be to settle any outstanding debts. This may include simply paying for assets that have not yet been fully paid off. Adequate life cover will prevent your family from having to shoulder debt, perhaps at the risk of losing some of their most valued and useful assets.