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.
Bear in mind that your death may directly affect your family's ability to meet their financial obligations, particularly if they were wholly or partly relying on your income to make payments.
Part of the life insurance payment can also be used to pay for estate duties and administrative fees. In the longer term, the sum can be used to pay for your children's education, and can be invested to assist your partner and children over time.
What to look for in an insurer?
When choosing life cover in South Africa, make sure your insurer has a proven record of quality service. You want a policy that your loved ones can depend on over time.
The death of a loved one is a traumatic and stressful period, so an insurer should undertake to pay the insurance benefit quickly, without any hassle. Customer service is similarly important - so look for an insurance company that emphasizes good customer relations.
An insurance broker will help you to select the right level of life cover, so that your family are adequately protected, at the best price.
Look for an insurer with flexible insurance products partnered with stringently selected insurance brokers, who will customize a life insurance policy that is right for you.
Author: Neo Ogilvy (GoArticles)