With Life Insurance cover the payout amount remains level throughout the entire duration of the policy.
This type of life insurance pays out the lump sum if death occurs within the length of time of the policy. It does not payout after the policy expires. Level-term coverage is available either as joint or a single policy. In addition, Life Insurance will payout if diagnosed with a terminal illness, but some companies will not do this within the last twelve months (one year) of the term.
This is the most common type of life insurance and is designed to provide a set payout to your beneficiaries. You decide the term and level of coverage at the time of application, either as a joint or single policy.
If you are the sole financial provider for your family, Life Insurance could be crucial to your family and their well-being after your death. Many individuals purchase this insurance to provide funds after their death so their families can pay for funeral expenses, repay a mortgage, or provide funds for living expenses and maintaining the lifestyle from before the death. The Life Insurance policy provides protection and security to your loved ones during a difficult and emotional time.
The cost of a Life Insurance policy will be contingent on the amount of coverage purchased and length of term, as well as age, health, and lifestyle.
Whenever you apply for life insurance, the insurer will determine what the risk is of them having to pay out on the policy. This determination will influence the cost of your monthly premium. The larger the sum assured and longer term of the policy, the more expensive your monthly bill will be. You will only pay this premium for the length of the policy term. It's important to keep this in mind when purchasing a policy to make sure you can sustain the payments throughout its term so there will be no adverse effect on your life insurance coverage.
It is entirely up to you as the purchaser to decide what you want the payout, or sum assured, to be at the time of your death. To determine how much coverage to purchase, you should think about your budget, as well as the needs of your family after your death. Do you want only enough money to cover your funeral expenses or do you want your survivors to have some additional money to live on as well? These are important questions that can help you figure out how much coverage to buy.
When purchasing level-term insurance, your coverage has a specified period of time associated with it, known as 'the term.' Remember, the longer period of time chosen, the more expensive your monthly bill will be. You set the term as the policy purchaser, but most insurance companies do have a maximum age limit when your policy can end, usually around 80 years of age, though this will vary by company, as some insurers extend the age to 90 years old. If you want to guarantee coverage until the end of your life, no matter what your age, whole of life insurance would be more appropriate for you.
If cost of the monthly premium is a problem, it may be beneficial to shorten the term of your life insurance in order to drop your monthly premium.
Perhaps your budget may not fit with a regular Life Insurance policy. An alternative option that could work is 'decreasing term' Life Insurance. In this type of insurance, the sum assured decreases over the term of the policy. As such, it is suited to mortgage repayment because the policy coverage decreases as your mortgage decreases. This type of insurance does not however, provide additional funds for your family after your death. If you do want your family to be taken care of financially after your death, then level-term is appropriate because you can choose a policy that will cover both the repayment of the mortgage, as well as providing money to your survivors. Whole of life insurance is a guaranteed payout for your family, but if monthly premiums are a concern, this type of policy might not be favorable, as it is the most expensive.
With all the expenses of everyday, it's easy to think that life insurance is an unneeded expense. But it couldn't be farther from the truth if you have a mortgage, family, or dependents that rely on your income. Purchasing a policy when you are able to assure the future of your loved ones after you are gone, is priceless.
If budget and pricing is your concern, there are a number of life insurance policies that exist that can fit with your budget and needs of your family after your death. Each policy is different and the amount of coverage you purchase will depend on your financial situation. There are a number of factors to consider when deciding what size policy is right for you, including: funeral expenses, amount repayment left on home mortgage, cost of living for family, education for children, and more. The higher you want the payout to be after you are gone, the higher your monthly premium will be for the term of the insurance. It's important to choose a plan that fits with your current budget so that in the event of your death, the policy is active.
There are many stories of family members hassling with insurance companies after the death of a loved one in order to get their rightful money. While these situations unfortunately do happen from time to time, the truth is that the majority of life insurance companies pay out over 90% of claims.
In the rare cases where insurance claims do not pay out for life insurance policies, there are a number of extenuating circumstances usually at play. These include:
Absolutely not! It is up to each person how much and the type of coverage they have in order to provide for their loved ones at the time of death. Having multiple policies cannot affect the existing policies or even future policy purchases either. It is important to remember that life insurance is cheaper when younger and healthier than purchasing a policy later in life.
There are times in life when you might consider purchasing additional coverage to fit the changing needs and demands of you and your family. These include:
Both of the above circumstances could require additional coverage to your life insurance to make sure that loved ones are provided for and do not incur any financial difficulty in the wake of your passing.
If you elect to shop around for new or additional life insurance, make sure to be diligent in how any previous policies are canceled. In the event you need to cancel a policy, make sure to compare rates and that the new policy will offer you the same amount of coverage at a rate you can afford. Prices are set by age, health, and lifestyle; every company uses a different method to determine the risk to insure you, rates can differ greatly from each company to another. Because of this, if you are older or have a change in your health, it could be much more expensive to buy a new or additional policy than it was for the original one. Conversely, if your health or lifestyle has improved (such as quitting smoking), then any new rates could be lower and to your advantage.
With some policies, it is possible to increase within your existing policy - called 'guaranteed insurability'. This change is often restricted to the following circumstances though: increased mortgage amount, marriage or divorce, birth/adoption of child, or salary increase.
Life insurance costs a different amount for every person because it is dependent on how old you are, how you live your life, and how healthy you are. Unlike car and home insurance though, the consumer can set the price they want to pay for their life insurance premiums. It is up to each person to decide how much coverage they want and what the needs of their policy are. Life insurance is tailored to the individual.
When thinking about life insurance coverage and costs, companies look at two big things with each potential customer: what is the likelihood that they will have to payout on your policy AND how much will it cost them to do it? In order to figure this out, each company employs a method of assessing those questions, based on the criteria of age, health, and lifestyle.
Age: The older you are, the greater the risk that an insurance company will have to pay out on your policy. The younger you are at the time of policy purchase, the lower the premium will be (usually). Most insurance companies will not cover individuals over a certain age, often 90.
Health: Your health, medical history, and wellbeing are important factors in determining the cost of your health insurance. If a person has more medical issues or a history of bad health, this could increase the monthly premium on your policy.
Lifestyle: How you live your life and the choices you make have a direct impact on the length of your life. Excessive drinking, smoking, or other habits that could be risky to your life are all factored into the assessment done when applying for insurance. With most companies, smokers typically pay almost double the premium than a non-smoker.
Occupation: What you do for work can have an impact on the risk assessment. There are some jobs that are higher on the risk scale for insurance companies than others, such as military or professional athletes. Any job that puts your life at a higher risk for death can increase the monthly premium because of the cost to insure you. It is possible that some companies could deny coverage for individuals who are deemed too risky to insure because of lifestyle or occupation.
Depending on your needs, each type of insurance has varying cost levels associated with it, with some costing more than others, all dependent on when and what the payout could be.
The term and sum insured amount of your policy will also affect the overall cost to you. The longer a term within a policy, the increased likelihood that an insurance company is going to have to pay out on the policy. Therefore, choosing a shorter term when purchasing your policy can reduce the monthly premium cost to you. In addition, the more coverage you have is the amount the insurer will have to pay out in the event of your death. This means that your monthly bill for that insurance will be higher to cover their payout loss. If you are trying to stay within a budget, decreasing the amount of coverage is a possibility, but make sure to adequately estimate your family's financial needs after your death.
Every application for life insurance, no matter the company, will require a series of questions regarding your health, medical history, and habits. This helps the insurance company understand all the risks associated with insuring you and come up with a cost that they will pass on to you in the form of your monthly premium. It is important that the information provided is truthful, current, and adequately displays who you are and the life you lead.
These questions include: height, weight, occupation, whether or not you smoke or drink alcohol, family medical history, past or existing medical conditions, and hobbies. The hobbies questions are mostly geared towards those individuals who may participate in extreme recreational activities such as skydiving, which greatly increases their risk of death.
The insurance companies do not use the medical questions to disqualify applicants, but rather to know as much as possible about an applicant so that life insurance coverage can be tailored to the needs and budget of each person. That's why it's crucial to be honest and transparent when doing the questionnaires because there is the possibility that an insurer would not pay out on a policy if the applicant lied about an aspect of their life or health, like not disclosing a pre-existing medical condition. Unlike when you apply for a mortgage or credit card, life insurance companies cannot pull some secret report about who you are and the life you lead-- the only information they know is what you provide to them. Being dishonest about your lifestyle or medical history can only in the long run hurt you as the consumer, and ultimately, your family if your payout is denied because of your omissions.
With all that in mind, if you are getting ready to apply for life insurance and have concerns that your habits or health might limit your ability to be insured for a price within your budget, it's a great reason to make those lifestyle changes you may have been thinking about like quitting smoking or hanging up your skydiving parachute!
The questions address a wide range of areas of health including sexual, mental, family medical history, and your personal medical history. Here is a sample of possible questions that might be asked on a medical survey:
Have you ever had any of the following illnesses?
Have you ever sought medical attention and advice for any of the following in the past five years?
If you have a pre-existing condition or answer 'yes' to any of the medical questions as part of the application, there are four possibilities for your life insurance application:
Acceptance/Accepted: There is a wide range of medical conditions that have no effect on life insurance acceptance or higher monthly premiums.
Premium increase: There is a possibility that your medical or lifestyle history may require the insurance company to charge you a higher monthly premium to cover their cost of insuring you. If you find this amount does not fit into your budget, you may consider changing the type of coverage you desire.
More information required: Depending on the issue, the insurer may want to have more information from you in order for them to make a decision. This could include a statement from your doctor, or in rare cases, a medical exam. After either of these, the insurer will then be able to decide if they will accept, deny, or charge you a higher premium.
Refuse to cover/ Denial: It is possible to be denied for life insurance by a company if they feel it is too risky for them to insure the person due to their medical history. While this may be disheartening, it is advised to look into other possible insurers if you are denied because each company uses a different set of criteria to measure risk and health, so while one says "no", there may be others out there who will say "yes."
It is important to note that there is life insurance available without answering medical questions or needing a physical exam. This is quite common with "over fifty" policies. Due to the age at the time of application, insurance companies know that the risk of your death during the term of the policy is much higher than an applicant in their twenties. Because of this, a medical questionnaire is not needed, but the company still protects itself by only paying out on the policy AFTER it has been active for two years.
Another note about over-fifty policies: because of when they are taken out, these types of policies are essentially whole of life. The policy will pay out no matter when you pass away, as long as it is passed the two-year minimum. These types of policies are frequently used to help family members pay for the cost of your burial and funeral expenses. While these over-fifty policies can be more expensive than Life Insurance, they are a good option for individuals who may not pass a regular Life Insurance medical exam.
Smoking is definitely one of the biggest habits that can negatively affect your life insurance premium rate.
Insurance companies usually classify anyone who has smoked or used a nicotine or tobacco product within a year (12 months) of their application as a smoker. In addition, if an individual routinely uses nicotine gum or other similar product as an effort to curb their smoking habit, most companies will consider you a smoker. If you omit this information from your application and at the time of your death it is revealed that you were in fact a smoker or user of nicotine products, the insurer can deny the payout to your family. It is beneficial to be honest about your smoking habits in your initial application then having repercussions, especially after your death.
In the past few years, many individuals that are trying to quit smoking have turned to e-cigarettes as a way to curb their habit. The life insurance industry is divided on this trend. Before deciding which company to use for life insurance, it is important to know their policy on this issue.
Of course, habits change over time, and it is possible (though not advisable) that a person who was not a smoker at the time of insurance application, could become one after the fact. If this happens and you were not a smoker at the time you took the policy out, then your new status as a smoker should not affect your existing policy. It is highly advised that if there are any major changes to your health or lifestyle, you should notify your insurer so they can keep it on file. This especially applies to the opposite circumstance- being a smoker at time of application, and then quitting after insured. If this happens, make sure to inform your life insurance company, as they will most likely lower your monthly premium if you have been nicotine and tobacco free for 12-18 months (depending on the company). So not only will you help your health by quitting, you'll help your wallet!
There is life insurance available for those with a terminal illness, called 'terminal illness cover.' This type of coverage pays out when you are diagnosed with the disease. It is designed to help with the many expenses associated with a life-ending disease, such as helping with living and care expenses. Many people use the funds to pay bills, make advanced funeral plans, or even to go on one-last trip with family. All life insurance includes this coverage and provides financial benefits if a medical professional has given you less than a year (12 months) to live. Most insurance companies qualify a terminal illness as a sickness that has no known cure or the patient is ill beyond treatment and cure, with only 12 months of survival. In most circumstances, if you surpass the 12 months alive, the ailing individual is not expected to pay back the benefit paid out. Two other important pieces of information about terminal coverage is that if an individual has a joint policy, the terminal coverage can only be paid out once (to the surviving policy holder) and if the second policyholder also were diagnosed with a terminal illness, the terminal cover option would not be available. Finally, most term-life insurance policies do not have terminal illness coverage if an individual is diagnosed within the previous 12 months of the policy.
Terminal illness coverage must be confirmed by your doctor, which will then be verified by your insurance company. Once the insurer has confirmed you are eligible for this coverage, they will pay out a one-time lump sum benefit to you. That amount is determined on your policy at the time of application and purchase.
Terminal illness coverage is different from critical illness coverage. Terminal illness has the express timeline of less than 12 months to live attached to it. Critical illness coverage on the other hand, is paid out if diagnosed with a serious condition or disease covered by the insurance company. This critical illness coverage is an optional add-on to your life insurance purchase, whereas the terminal illness is part of all policies. Critical illnesses are determined by the insurance company and many of them are treatable, curable diseases.
R3.8m approximate costs of raising a child from birth to 21
1 in 29 children will lose a parent while still in full-time education.