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THE 3 TYPES OF LIFE INSURANCE

Before you decide on how much coverage you need on a life insurance policy, you need to decide what type of life insurance is going to meet your your requirements best. As a resident of South Africa you have three types of life insurance policies to choose from. They are whole life insurance, term life insurance and universal coverage. You should use the services of a reliable life insurance broker to help you determine what type of life insurance coverage is right for you and your family, and how much coverage you are going to need.

Let’s take a look at these three options.

Term Life Insurance

A term life insurance policy covers you for a set, predetermined length of time. It is a good type of coverage to have if you feel you only need insurance coverage for a short or limited period of time. These policies typically can be purchased for ten, fifteen, and twenty years so they are excellent policies to have during major time frames of your life, like paying off your home mortgage. These policies tend to be very affordable but they do not have any type of cash or investment value once you have paid the policy off. Basically the coverage will cease to exist at the end of the term. If during the term of the policy something happens and the Insured passes away, the policy will pay out to their estate.

Whole Life Insurance

A more comprehensive life insurance policy, whole life insurance offers you a guaranteed payout. The Insured pays on the policy from the day they invest in it till the day they die or until they surrender the policy. The policy beings to build up cash value because the Insurer invests the premium payments. Upon the death of the Insured, the policy pays out to their estate. Additionally, if they are awarded a whole life insurance policy from an Insurer they never have to worry about whether or not their health causes them to become uninsurable. Once the policy has been paid long enough to earn a cash value the Insured can borrow money against the policy. Premiums for this time of life insurance are usually higher than a term life policy.

Universal Life Insurance

A universal life insurance policy is basically a whole life policy with an investment option. For every premium payment you make above the monthly premium cost of the insurance an additional cash amount is credited to your account. You earn interest on that cash amount each month. This type of policy offers you the possibility of rapid growth on your investment.

When you talk to South African insurance brokers about life insurance, make sure they give you quotes (or at least details) on all three types of insurance, so that you can make the right decision about the policy that will protect your family best.

 

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