Term life insurance is insurance that provides coverage at a fixed rate of payment for a limited period of time- the relevant term.
If the life insured dies during the term, the death benefit will be paid to the beneficiary.
The primary use of term life insurance is to provide coverage of financial responsibilities for the insured or his or her beneficiaries.
The simplest form is for a term of one year.
How term life insurance works:
Term life insurance products are not very complicated to understand. It is also the most inexpensive way to purchase a significant death benefit on a coverage amount per premium. After the period expires, the cover at the previous premium can no longer be guaranteed and the consumer has a choice to either forego the cover or to obtain additional coverage.
The insurance policy pays out a lump sum to your chosen beneficiaries when you die.
Term life insurance often has lower premiums applicable.
Term life insurance providers in South Africa:
- Absa
- Guardrisk
- Hollard
- Insurance Busters
- MS Life
- Pillar
- Sanlam
- Zurich
In South Africa, insurance providers are governed by the Financial Services Board (FSB). Insurance companies are obligated to provide insurance quotes and policies in line with regulations set by the FSB, so any term life insurance policies must be granted to individuals who can afford the premiums.
When searching for the right type of term life insurance, an accredited financial advisor can help by conducting a detailed financial needs analysis. He/she should also be able to provide you with a comprehensive list of affordable options that can best meet your term life insurance needs as well as your budget.
Factors that determine term life insurance premiums:
- Lifestyle factors such as schools attended, a bond being paid etc.
- How much insurance you need
- Personal details
