What is life insurance?

Life insurance is a type of cover that pays out a sum of money either on the death of the insured person or after a set period of time. It involves a contract with an insurance company in exchange for a premium payments and the insurance company provides a lump-sum payment to beneficiaries upon the insured’s death.

Tips on how to buy life insurance:

Start by working out how much your spouse and family would need financially if you weren’t around.

Compare the different life insurance forms you could buy.

You need to get quotes from various insurance providers.

You don’t need to accept the first life insurance offer you get – it always pays to shop around.

Keep in mind that how much you pay for life insurance depends on the amount of cover you want as well as the likelihood that you will die in the near future.

Your premium will depend on a number of things, such as:

  • Age
  • Marital status
  • Whether you smoke or have previously smoked
  • Health
  • The kind of job you have. Certain professions are considered high-risk
  • Hobbies

The amount of cover you need will depend on:

  • Your take-home pay – It depends on how much you earn after taxes. You need to be able to afford your premiums on a monthly basis.
  • Debts – you need to consider how much money you owe to various creditors. The life insurance you get should be enough to cover these debts in the event of your death once you get your pay-out.
  • Mortgage or rent
  • The number of dependents you have – the life insurance amount you get should be enough to sustain your family.

You’ll also need to consider the length of time you want that policy to last. The policy should be able to sustain your family for quite a while.