15 Jan From Love to Legacy: Exploring the Heart of Life Insurance

As a young person, it’s probably hard to imagine insuring your death, right? Life insurance is one of the ways you can ensure your family or loved ones don’t have to fall under financial strain. It protects your family in the event of debt, death, disability, severe illness, or loss of income. It creates a legacy of love, “My loved one cared for me so much they would protect me even in their absence.” Let’s explore how life insurance works, how it protects you, and the ways it protects your family, even after you’re gone.

Life Insurance Types: Term Life vs. Whole Life Insurance vs. Universal Life Insurance In South Africa

There are three types of insurance, “term life”, “whole life”, and “universal life”.

What’s Term Life Insurance?

Term life insurance is life insurance that typically lasts anywhere from 10-30 years. They’re usually cheaper and have better benefits because you’re less likely to die between those years, especially if you’re young (and because not everyone ends up dying in that window.) The amount you pay is determined by your age and health.

Here’s how a colleague explained it:

“When my husband and I were 25 and planning a family, we got term life insurance. I pay R420 a month and he pays R800 a month because he has multiple sclerosis (so his likelihood of dying in 30 years is higher). If one of us dies while the kids still live at home, the other will have enough money from life insurance to pay off the house and funds left over to try to replace the dead spouse’s income. We will not renew these policies after 30 years because by then the kids should be independent, the house will be paid off, and the impact of death would not financially be as great.”

What’s Whole Life Insurance?

Whole life insurance is quite similar to term life insurance, barring the fact that it only lasts for a certain term. Whole life insurance covers you from onboarding to death, guaranteed eventually, but only covers certain things. So for example, it might not cover suicide or negligence. Life insurance exists to cover a loss due to your death, things you should or would have paid for had you been alive. So for instance, mortgage payments, weddings and university payments.

Compared with universal life insurance, it’s a lot more predictable and stable. This is because it offers fixed minimum interest rates, premiums, death benefits and guaranteed returns. It doesn’t offer much flexibility to reflect changing needs. Its growth is predictable but slower than universal life insurance.

What’s Universal Life Insurance?

Universal life insurance is similar to whole life insurance in that it covers the entirety of your life from when you first sign up to your death. However, the insurance has more flexible death benefits and premiums as it can be adjusted to changing financial needs in your life, which may affect your cash value growth.

You should choose universal life insurance if you value flexibility in your death benefits and premiums.

To conclude, remember that procuring life insurance is not only the smart thing to do, it is the right thing to do. Whatever life insurance you choose, it is a monetary legacy to those you love, a forcefield against Life’s storm.

Contact our friendly consultants to get coverage for your loved ones today.