Get a tailored Life policy that offers you real value
Life cover not only offers your family a financial safety net to fall back on after you’re gone but allows you to leave a worthy legacy by ensuring your debts are paid off and your children can continue their education.
In exchange for a monthly premium, you will get cover of a specific amount which will be paid out to your beneficiaries or estate in the event that you pass away.
What does Life cover include?
It includes a lump sum payout as well as a variety of typically optional add-ons such as critical illness and disability cover, income protection, and an accelerated funeral benefit.
Most policies offer an increased payout in the event of accidental death.
It will payout in the form of a lump sum that can be used by your dependents to pay off your debts, cover living expenses, continue their education, and stay afloat financially.
Many lenders will also require that you have life cover in place in order to approve you for finance such as a home loan.
Does Life insurance payout for terminal illness?
You may be able to make a terminal illness claim on your policy if you are diagnosed with a terminal illness and have and have a life expectancy of 12 months or less. Critical illness cover can be added to your policy as an additional benefit. This may increase your monthly premium but it will also extend your cover.
What is the maximum cover amount?
The maximum life insurance payout amount is R16 million but most people will not need nearly as much to cover their debts and secure their families financially.
The higher the payout the higher your insurance premiums will be so make sure you conduct a financial needs analysis before taking out cover. You should calculate what debts may need to be paid upon your passing and what financial commitments you will still have at any given time in your life. Take into account things such as university fees or a wedding for your daughter when doing your financial planning.
What are the different types of cover?
Life insurance simply pays out a lump sum in the event that you pass away of natural causes or accidental death and this should not be confused with policy extended/ additional benefits like dread disease, critical illness and disability cover.
Do I really need Life cover?
If you are financially responsible for anyone else or have debt you should have an appropriate life policy in place.
The cover is determined based on how much debt you have, your monthly income and expenses, as well as your budget but you can estimate the right amount by multiplying your annual salary by up to 10 times.
The more debt you have and the more monthly expenses your family has the more you will need to ensure you’re adequately covered. A financial advisor can assist you in establishing the right cover amount.
Most home loan providers will require you to take out cover to the amount of your mortgage. This policy will typically be ceded to your loan provider, and not to your family, to pay off your bond upon your passing.
What additional benefits can I include?
When speaking to your financial adviser or broker about what cover would be best for you, you should also include discussing what additional benefits you will need.
Life insurance does not automatically include funeral cover, critical illness or dread disease cover so it needs to be taken out as a completely separate policy or added as an additional benefit.
Adding these as additional benefits to an existing cover plan can save you money and hassle as it will be covered under one umbrella policy with all your different covers with one provider and point of contact who will more than likely be able to offer you affordable premiums for a bundle policy.
Can you have more than one Life insurance policy?
There is no law that prohibits you from taking out multiple policies and in fact, it is very common.
You must however guard against becoming over-insured as it will not only be costly to maintain multiple premiums but your policies can be difficult to manage.
With high competition among insurers, most plans offer more or less the same level of cover, similar options to choose from, and identical terms and conditions, it’s simply a matter of which insurer offers you the most suitable product for your specific needs.
How to make a claim?
Contact the insurer who will provide you with a list of required documents and forms to complete in order to proceed with a claim.
Documents that will be required for a claim include a certified copy of the deceased’s identity document, a completed Notice of Death form, and a death certificate.
You cannot claim premiums as tax-deductible unless you’re paying the premiums on behalf of someone else. A payout will be tax-free which means your beneficiaries will not have to pay any tax on the lump sum payout.
How long does it take to payout?
Provided that there were no fraud or disclosure issues on the part of the policyholder and the premiums are up-to-date, the cover will certainly payout.
Any refusal to pay out a claim must be accompanied by reasons for such refusal and may be contested by the beneficiary. Life insurers are obliged to pay out if all requirements are met.
In order for your policy to pay out in the event of death from natural causes, a period of usually 6, 12, or 24 months must have elapsed from the policy inception date. Accidental death is covered immediately. Most policies will pay out even if the death was a result of suicide as long as the waiting period (which is typically 24 months) has elapsed.
Once all the documentation has been submitted it should take no more than 15 working days for a life cover policy to be paid to the beneficiaries.
Delays are usually caused by administrative problems such as documents not being provided or documents containing errors that need to be fixed.
Do I qualify for Life cover?
If you are a South African citizen or permanent resident you will be able to apply for a life insurance policy.
The premiums vary extensively because they are based on your individual risk profile, cover amount, and personal budget.
If you’re a smoker, have any health conditions, have a high-risk occupation, or are older, selecting a higher life cover amount will mean that you’ll have to pay higher premiums.