Life Covers

The Benefits of Life Covers

The unpredictability of life makes insurance an indispensable form of protection and no matter how careful we are as we go about our lives, you never quite know what might happen tomorrow. There are various types of life covers that can provide peace of mind for you and your family.

Kinds of Life Insurance Cover

There are a host of life insurance policies that you can choose from and each affords certain benefits to specific situations. Term insurance is the most inexpensive type of cover and it protects you for a set period of. It is a straightforward policy – once the insured dies, you receive a death benefit. If he survives, there is no payout.

Whole life insurance combines the advantage of life cover and investment. Should you fall terminally ill or die, an assured sum is paid. If you survive, you can trade in your policy for a cash sum.

Endowment insurance is similar to whole life in terms of life cover – if you die, you receive an assured sum. This type of policy has a savings element to it and if you survive, the savings (maturity value) is given back to you.

Single or Joint?

Life covers can be taken out separately or you can opt for joint insurance where both you and your spouse are covered under one plan. The policy pays out on the “first death” that happens and it expires thereafter. You should carefully consider your situation before opting for a joint policy.

It is usually easier to have separate policies written in trust compared to a joint one. This eliminates any delays that may occur once your family makes a claim. Further, with two single policies your beneficiaries receive benefits in both deaths. There won’t be any need for your spouse to purchase another life cover.

Lump Sum or Family Income Benefit?

With life covers, you can also choose to have your payouts issued in a lump sum or under the Family Income Benefit scheme. A lump sum payout is received one time, in bulk and this is advantageous if your beneficiaries would like to spend the payout any way they like. They can use it to pay the mortgage right off, invest it or place it in a savings fund.

In contrast, Family Income Benefit pays out money to your beneficiaries in regular sequences. This is a good idea if your beneficiary is unable to manage huge amounts of money. You prevent the possibility of the payout being used up in one go.