Taking Out a Life Policy
Life insurance or life policy cover is a means of ensuring that your family or dependants are financially secure in the event of a death or disability. Things to consider when investing in life policy are:
- How much life cover do I need?
- How and when will my policy be paid out?
- Are there options of having readily available cash while my estate is being wound up?
There are many affordable life insurance plans available for South Africans featuring great benefits. Life insurance quotes are available from your adviser or you can do your own background research to find an insurance provider that meets your needs.
Without insurable interest, it would be very easy to take out a life policy on elderly strangers, and then collect the proceeds when they passed away. Insurable interest is also a risk management factor – it prevents people buying a life policy where they could influence an outcome, such as committing a crime.
The Origins of Life Insurance
The origin of life insurance can be traced back to the Middle Ages, when bets were placed on the life and death of various people. Even 17th Century travelling merchants gambled with their own lives by placing bets on their safe return. Society’s obsession with insurance led to the creation of companies that would insure almost anything and speculation with lives became an extremely popular form of betting.
Is Life Insurance Needed for Elderly Parents?
In most cases, the passing of a parent means that there are burial costs and other expenses that must be taken care of. If your elderly parents don’t have enough life cover, or none at all, it can leave a considerable financial burden on you and your family. This means there is an insurable interest basis for insuring your elderly parents, and it’s something you would need to consider as they get older.
Life insurance is ultimately about protecting you and your family. More importantly, it should always be based on your needs. If you would like to insure someone else’s life, make sure that you are choosing the right product and the right amount of cover by speaking to a financial adviser.