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January 31, 2019

What are the different types of Life Insurance covers?

a)      Term Assurance

This policy offers protection only for a particular period which is agreed upon by the insurance company and insured. It is the simplest and cheapest form of life insurance since it provides life cover only with no investment benefits. The insurance company will pay out the full sum assured if the insured passes away within the insurance period. There are no benefits that are payable if the insured is still alive when the policy matures.

b)      Endowment

An endowment policy combines both protection and investment. The insurance company will pay out the full sum assured if the insured passes away within the insurance period. If the insured is still alive when the policy matures, the insurance company will pay out the sum assured and all the bonuses earned in the course of the policy.

c)     Whole Life

A whole life policy offers life-long protection to the insured. The insured selects how they would like to pay premiums. It could be throughout your life, you can chose to cease payment at a particular age (for example at 60), or you can chose to pay one single premium.

d)      Unit Linked / Investment insurance policies

Unit linked policies also combine protection and investment. A part of   the premium is used to purchase life protection and the rest is used to purchase units in an investment fund managed by the insurance company. Investment returns on the policy are linked to the investment performance of the managed fund.

e)     Funeral Insurance cover

Funeral Insurance cover is meant to cater for funeral expenses of a insured or their loved ones in the event of their demise. The benefits are payable within 48 hours after notification of death.

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