Types of Life Insurance

What Types of Life Cover Are There?
There are various policies available under life insurance.

These include:

  1. Whole of life or permanent cover.
    A whole of life policy will offer continued death cover for a specified sum. In return you have to pay a yearly premium, which is calculated according to the number of years you are expected to live. These policies have an accumulated asset or cash value, which can be paid to the insured if he/she surrenders the policy before death. Because of this cash value the premiums are higher than those for term insurance.

  2. Term insurance.
    Term insurance, as its name suggests, provides cover for a term. Even if the insured survives to the end of the term period, no amount is payable to them. Their policy only pays out on death and because it does not include a cash value or investment element the premiums are considerably lower.

  3. Investment type insurances.
    Some insurance companies have developed policies, which are a combination of all the features of the other forms of life insurance and have developed an investment type policy. They combine the features of the endowment policy with its high savings return.

  4. Endowment insurance.
    This insurance provides for the payment of a lump sum, but only if the insured survives to the end of the specified period. That is, if he/she lives to the end of the time - they will collect. It generally also provides a death cover for a specified sum and a cash value on surrender.

  5. Accident disability and sickness insurance.
    These are all brought under the term of life insurance, but they all have different benefits and different features.

  6. Annuities.
    With an annuity policy, a lump sum is paid to the insurance company to buy an annuity, which then provides an income that is paid out periodically until the person in the policy dies. It provides for the person in the policy to receive an amount that will assist them with their living cost. It is different to the usual life insurance policy because a lump sum is paid over initially, whereas the usual policy requires premiums to be paid throughout the life of the insured and a lump sum is then paid out on death.

Other Insurance

  • Income Protection Insurance
    Income protection provides cover in case you require income due to inability to work. The inability can be caused by injury or sickness. This means that when you cannot continue work you still have an amount coming in as income, which will help you to survive.

  • Trauma Insurance
    Trauma insurance will provide for an amount of money to be paid out based on a diagnosis, which has caused you trauma. For example, you may have been assaulted or have news of an illness, causing you trauma, which once diagnosed will qualify you for a claim under this policy.

  • Disability Insurance
    You may get total or permanent disability insurance. This provides for lump sum payment where an event happens that causes you to be totally or permanently disabled.

  • Loan Protection
    You can take out insurance cover to provide for repayment of a loan that has been taken out to meet business needs. It gives the lender of the money certain amount of insurance that should anything happen to you their loan will be repaid from this policy.

  • Key Person Insurance
    You can insure against losses to your business that will occur if key people die or become disabled. The amount of payout will go to the business and the business can then use it to arrange for replacement people to carry out the functions that you would have normally performed. It generates a certain amount of protection for the business so that the loss of key people can somehow be minimised by making alternative arrangements as soon as possible.