If you’ve only got a minute:
- There are two main types of life insurance policies: term life and bundled products such as whole life, endowment policies, and investment-linked policies (ILPs).
- Life insurance protects your savings and investments, while preserving the livelihood and the lifestyle of your loved ones.
- While there are many choices to choose from, each type of life insurance policy serves a different need, from financial protection to savings to investment.
If you own something valuable that you want to protect - like your car or your home - you would know to buy car insurance or home insurance to guard against any loss or damage. But what if the things you value the most aren’t in fact, things? What if your most valuable possessions are the people in your life, like your spouse, your children, your parents and grandparents, and your siblings? Then you need to be protecting them with life insurance.
When you buy life insurance you are protecting yourself through savings and investments, while also protecting and preserving the livelihood and the lifestyle of your loved ones in the event that you contract a very serious illness, suffer total and permanent disability or pass away.
Learn more about what it takes to choose a good life insurance policy.
What is Life Insurance and what do you need?
Life insurance is a contract between you and an insurance company, for you to receive financial benefits in exchange for paying a premium over an agreed period of time. The payments are triggered by specific events covered in the contract, such as death, total and permanent disability and terminal illness.
As such, a life insurance policy provides financial support during such emergencies.
You can also purchase riders that are tagged to life insurance plans, that protect you against critical illnesses. These riders may accelerate the benefit pay-outs.
Why do you need life insurance?
The main reason why anyone buys life insurance is for the protection element. This refers to the financial payouts paid by the insurer when we pass on, or become totally and permanently disabled.
If you contract a terminal illness or become permanently disabled, the payouts from your life insurance policy can alleviate the cost of your treatment and long-term care needs, without burdening your family. If you pass away, then the payouts will go towards the living expenses of your loved ones and make up for the loss of your income.
Some life insurance products bundle insurance with a savings/investment component. These can be used in the future for your retirement income, or to accumulate savings as an inheritance for your loved ones. Such policies will cost more.