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.

Most obviously, life insurance can provide for your family in the event of your death. 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).

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 cases, the payout is used to pay off specific debt. Because debt can be a large part of our financial picture, many people choose to link their largest debt obligations to a decreasing term insurance policy. For example, if you choose to cover your home loan with decreasing term cover, your premiums for this cover will decrease as you make your loan installment payments. If you die before the loan is paid in full, the insurance company will pay the balance of the loan directly to the bank.

Whole life insurance would be an appropriate option if you want the benefit to be do more than merely pay off debts. Premium payments would be made through your life and you do have options has to how you want to make these payments. For instance you may opt for levelized payments or higher payments that would cease when you attain an age of 60, 65 or 85. Upon your death, the insurance company will issue a payment in the amount you chose to your beneficiaries.

South Africa is only one of two countries where life insurance is available for people who have tested positive for HIV or have AIDs. The premiums are slightly more expensive and the insurance companies will need policy holders to continue with anti HIV therapy.

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

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