What is Term Life Cover?
Term life insurance is an inexpensive way to get yourself and your loved ones insured. Term life cover offers limited coverage, which allows insurance products of this type to have such low premiums compared to products under whole or universal life insurance.
Terms life insurance has these following aspects:
- Affordable death or burial benefit
- It can be renewable every year, or non-renewable. A renewable term life policy means that it has to negotiated annually or after the specified period in order for you to continue receiving coverage. Renewability is not guaranteed however. An example of when the policy would be difficult to renew is if your insurability depends on the wellness of your health. If you are perceived to be too ill to insure, you may be required to take whole life cover instead of term life cover.
- You can opt for level life insurance where you can fix your monthly premiums for the duration of your coverage. This not only saves you money immediately because of the already low premiums, but the long-term savings can be quite significant as well.
- Convertible term life insurance policies are those policies which you can convert into whole life insurance. One obvious benefit for this is that you can enjoy the low premiums of term life insurance for most of your life, but can then decide to convert your policy into a universal life cover when you have retired. By now taking up whole life cover, you get the benefit of a significantly larger payout for yourself or your beneficiaries.
Term Life Insurance in South Africa
Term life can be viewed in the same light as car insurance or other short-term insurance products, although term life is a form of long-term insurance. To make the similarity more understandable, you only required your car insurance for as long as you own and/or have use of your car, and not beyond that.
Similarly, you may only need term life insurance if you have a mortgage bond and are cautious about what would happen to your house if you passed away before it was fully paid up. In the worst scenario, the bank can repossess it and throw your family out because they cannot carry on with the monthly repayments. But because you have a term life policy during your repayment period, your insurer would pay the lump sum which your estate could use to settle the debt on your house.
If you do not pass away or become unable to pay your premiums but have finished your mortgage, then financially, you would not really require a life insurance policy, but more of funeral cover and other specific life policies like disability insurance, etc.
A lot of companies sell term life insurance products. Some include Metropolitan Life and Liberty Life. Both these companies and the other ones which you can get quotes from on our website offer to pay back all your premiums after a certain date (expiry date) if you outlive your term life policy. This can be very attractive because it can be seen as a form of investment.