Why You Need Life Insurance

Written By: Tom Martens on February 8, 2010 No Comment

Most people will be able to benefit from life insurance. It supports its beneficiaries financially and brings peace of mind to the policy holder. Here are a few reasons for why you need to get life insurance.

It essentially works like this: in return for your monthly premiums, the insurance company agrees to pay a lump sum to your beneficiaries (the person or people you designate to receive the death benefit).Most obviously, life insurance can provide for your family in the event of your death.

Your beneficiaries are not restricted in how they use this money. That means that even if you die, your family can pay off debt, keep their home, go to college – in essence, your family will be able to maintain its lifestyle without your assistance. Of course, all this depends on which type and how much life cover you choose to buy.

In some instances, the benefit may be used to pay off money you owe. Some people may choose to link their largest debts to a decreasing term insurance policy due to the magnitude of their debts. For instance, a decreasing term policy covering a home debt will charge lower premiums as the the home loan is paid off. The insurance company will pay the remaining amount to the bank should death occurs before the loan has been fully paid.

If you would like your insurance death benefit to pay more than just enough to settle outstanding deaths, whole life insurance may be a viable option. Here, premium payments are made in the course of your life. Plans are available where you to pay a level amount throughout, or pay higher premiums at the start of the policy. Depending on the plan, payments cease stop at age 60, 65 or 85 but coverage will still continue. In the event of your death, the insurance company will pay out a benefit to your chosen beneficiaries. The benefit does not depend on how long you have actually held the policy.

If you are HIV-positive, South Africa is one of only two countries that offer life insurance cover for people with HIV/AIDS. Your premiums may be somewhat higher, and your insurance provider will require you to maintain antiretroviral treatment.

Make sure that you deal with reputable and dependable companies that are known to honor their payout agreements. Most experts recommend checking with more than four companies to find out about the different options and plans in the market.

Bear in mind that a life insurance policy may be the only protection your family has from financial hardship in the event if an unexpected death. The peace of mind coming from the knowledge that your family will be provided for more than offsets any inconvenience you may experience now.

Tom Martens is the syndication coordinator at lifeinsurance-southafrica.co.za. South Arica’s leading Life Insurance portal