Life Assurance in South Africa

Life Assurance in South Africa
Life assurance in South Africa, Life assurance quotes

Life assurance is a sound investment.

Life assurance offers South Africans an affordable way to ensure their families are protected in the event that they pass on. When a person dies responsibilities such as paying the mortgage, utility bills, school fees, car payments and other living costs, then become the responsibility of the family.

Don't let your family carry this burden alone - support them in death as you do in life, by taking out life cover today.

How to Apply for Life Assurance

First and foremost, you need to decide whether you need life insurance or life assurance and then choose the level of cover. There is still a debate on whether the two forms of insurance policies are the same but, the important thing is to find cover that meets all of your needs.

When applying for insurance factors such as age, current health, and education, amongst other things, are used to determine monthly premiums and level of cover. Usually, people take out life insurance that pays a predetermined amount to the beneficiaries, in case the policyholder dies.

This article will unpack the differences and similarities between the two. To this end, life assurance seems to be a better option when compared to life insurance because of the sum of money that is paid to the policyholder at the end of the insurance term. In the case of life insurance, there cannot be money paid out if there was no claim before the insurance term expired.

Difference Between Life Assurance & Life Insurance

Life assurance is cover for an event certain to happen whereas life insurance covers something that might happen. Life assurance is not only a form of insurance, it also fuses investment elements. However, in certain countries like the UK, life insurance and life assurance are viewed as one thing.

That said, some experts believe the terms life insurance and life assurance are confused. First of all life insurance provides the policyholder with a cover for a specific period of time, so, in case, the policyholder dies, the insurance company pays out a certain amount that is tax-free.

The downside to a life insurance compared to life assurance is that if you do not die during the insurance term you lose all the premiums you paid. You do not get a cent from the insurance company. In essence, your policy does not have any “residual value” if you survive the policy term. There is some similarity of life insurance with car insurance.

Unlike life insurance with cover for a particular period of time, life assurance pays out an amount equivalent to the “higher”of either a least financed amount by the insurance policy's requirements or its investment assessment.

Life Assurance as an Investment

The insurance investment performance is crucial in terms of the value of the investment as well as the period of time the premiums have been paid. This is how it works; once annually the insurance company adds a bonus to the assured value of the policy holder’s life assurance policy.

The annual bonus is not the only bonus that the policyholder gets; there is also an additional “terminal bonus” at the end of the policy term. The good news here is, the policy value increases every year due to the accumulation of investment bonuses. As indicated above, the worth of the bonuses are decided by the insurance company`s overall investment accomplishment.

Then comes a time when the policy`s investment value is allocated and it is the ideal time to cash in with the insurance company. However financial experts advice that, policyholders should consider selling their life assurance policies to specialist investment brokers instead of cashing in with insurance companies.

If the policyholder does not survive the policy term to cash it in, the policies will still pay out the “higher” of one of the two, the agreed least sum or the worth of the annual investment dividends. The advantage is that if you are alive by the time the policy term ends, the payout is greater. At this stage of the life assurance policy, generally insurance companies grant more terminal payout additions.

Where to get Life Assurance

There is also another difference between a life insurance and life assurance policy. You can sign up for life insurance online whereas with life assurance you have to find a suitable financial advisor. The reason being that life assurance is viewed as more of a financial investment than just insurance.

A financial advisor will certainly gather your personal information before recommending a product, unlike the process of getting life insurance online.

Consequently, it is impossible to buy life assurance online, however, you can use the internet to your advantage by searching for a suitable financial advisor to assist you with your life assurance policy.

You find the financial advisor and use the opportunity to meet and discuss your financial needs and what you would like to get out of a life assurance policy.

The Different Types of Whole Life Assurance

There are three different types of whole life assurance policies. The first one is the interest responsive whole life insurance policy that allows the raising of the death profit without increasing the payments/premiums. The value also depends on the exploits of the economy and the amount of earnings on the cash value aspect.

The second type is the traditional whole life insurance policy that offers an assured least possible amount of earnings in the cash value aspect.

Lastly, there is the single-premium whole life insurance for those who have the financial means to make a once off payment towards the policy. The benefits are still the same as the policyholder`s cash value will increase over a period of time and also enjoy the same tax benefits.

Why you Need Life Assurance

Death is something that cannot be predicted and it is important to be ready for it. When, as a breadwinner, you pass away your dependants are usually left in desperation if there is no plan for the future. Whilst the focus of life insurance is the policyholder`s family's financial protection in case of death life assurance can act as a long term investment. 

Life assurance takes care of all most important costs that crop up such as full repayment of a mortgage after the death of the policyholder. However, for general costs both life insurance and the life assurance are ideal to cover the costs.

Tax Implications and Extras

Death benefits and premiums remain the same during the insurance policy life. Another advantage is that some insurance companies providing this cover allow the policyholder to add critical life cover to their policy. It is up to the policyholder to make changes, if there are no changes made to the policy, this cover is lifelong and requires no further medical examination from the policyholder.

Unless the policyholder withdraws or borrows against the policy, the cash value remains tax-free. The tax saving is one of the advantages of life assurance.

The Cost of Life Assurance

Considering the added benefits and long term financial benefits, life assurance seems like the perfect insurance cover but, it comes at a cost. Life assurance is expensive - hence the majority people still choose life insurance or credit life cover instead.

Another reason some people have opted for life insurance or term life insurance instead is that Investment earnings on life assurance policies have decreased considerably in recent years persuading some insurance companies to institute penalties for early cashing in of policies. As a result, the resale values of life assurance policies have been affected.


Featured providers of Life Assurance in South Africa