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News Room

Important Tips for Choosing the Right Life Insurance

Jason Snyman
2020-04-14
With so many important factors to keep in mind, choosing the right Life Insurance policy is no simple task, and it's easy to become overwhelmed. Here are our important tips to understanding what Life Insurance is, how it works, and how to choose the right policy.

Some of us may have seen Life Insurance advertisements in the past, and some of these may have utilized fear or guilt in a transparent effort to sell their product – you could die at any moment and leave your family financially destitute – and this may have left a bad taste in your mouth for a long, long time. 

Life Insurance, however, may be one of the most important, helpful and positive investments we’ll ever make. In order to see it through an optimistic lens, we need to understand what Life Insurance is, how it works, how it can benefit you and your family, and how to go about choosing the right policy.  

This isn’t a simple task. With so many different insurance providers to choose from, it’s easy to feel overwhelmed. 

So, let’s take it one step at a time, and simplify the process as much as possible.

What Is Life Insurance?

First off, let’s take a quick look at what Life Insurance is and how it works.

Plainly put, common Life Insurance is a long-term contract between yourself (the policyholder), and a Life Insurance provider. You agree to pay for the policy on a regular basis (these payments are called premiums) and in return, the insurance provider agrees to pay a sum of money (either a once-off lump sum or monthly instalments) to your chosen beneficiaries in the event of your death.

So, it works pretty much the same as any other insurance product would, except for a few small differences. The most important and obvious of these being that, in death, it is your family (or whoever else you may have chosen as your beneficiary) that will receive the insurance payment, and not yourself. 

Of course, there are some exceptions, depending on the type of policy you have. Within those aforementioned parameters are many different types of Life Insurance policies and products to choose from, providing cover in different ways and from a variety of risks, depending on your needs. This could include the likes of additional funeral cover, or cover in the event of any serious illness or disability that would render the household breadwinner incapable of earning a living. 

Because illness and disability is also taken into account, the costs of your monthly Life Insurance premiums are commonly determined by your risk profile (lifestyle, health, age, gender, and occupation), much the same way that vehicle insurance premiums are calculated, and these premiums may also be increased to enable a greater claim payout. 

Life Insurance, in short, provides a long-term financial safety net for our loved ones, our business partnerships or even the charities and organizations that we are passionate about. Important life events, such as starting a business or getting married or starting a family, are opportune moments to look into acquiring these policies. 

The grief of losing a loved one could become worsened by the task of having to tie up all the loose ends that person may have left behind, and Life Insurance payments allow the family to cover the costs of anything from day-to-day needs, education, medical expenses, businesses operations or any possible debt left unattended to. It allows them to continue living their lives without the burden of lost income. 

How to Choose the Right Life Insurance

So, there are many good reasons to acquire Life Insurance. It can keep your family and business going, it takes care of debt, estate taxes or unpaid bills, and it provides cover for future health concerns, such as serious illness or disability. The benefits are plentiful, and Life Insurance has proven itself practically indispensible to modern life on many occasions. 

The really important question here, though, is how to choose the right Life Insurance to begin with. 

Many people will choose their Life Insurance provider based solely on the competitiveness of their insurance quotes, or the affordability of their products. Price is important. When times are tough and money gets tight, Life Insurance is commonly one of the first expenses we cut, and we really, really shouldn’t, so it’s vital to choose the policies that we can afford now, as well as in the future. Take the time to compare quotes from several insurance companies, and then set the most appealing options aside for deeper scrutiny. 

Affordability is but one of the many factors to consider when making such an important decision, so let’s take a look at some of the others. 

Understand Your Needs

You need to question your motivations. Why do you need Life Insurance? What is the goal? Is it to leave an inheritance, or to ensure that your children may go to university, or to cover bond or car payments so that your spouse doesn’t have to do it alone? Why do you need Life Insurance?

This is the most crucial question of all, and the answer will not only motivate your decision to get the right insurance policy, but will also determine the type and amount of cover you require. There’s no need to look for R20 million in cover if you only require R1 million, for example. 

Be sure to do thorough research. If you’re unsure of how much cover you might require, or if you’re unsure of any insurance terms, limitations, exclusions, or anything else, speak to a good broker about it until you’re entirely comfortable.

Evaluate the Product

The Life Insurance products offered should not only be competitively and fairly priced, but should also deliver exactly what you need. Many insurance companies continue to innovate and deliver new and exciting products, specifically geared toward the particular needs of the modern consumer, and some of these may even include appealing benefits. 

It’s worth reviewing the company’s selection of products until you’ve found what you’re looking for, and if you’re unsure of where to start, then it’s a good idea to speak to a knowledgeable broker about your specific needs.   

The Financial Solidarity of the Company

It’s important to select a company that has proven itself financially sound over the years, because no matter how good the products, no matter how competitive the rates, that company needs to be financially secure enough to honour your claims when the time comes. 

It’s worth noting that size does not equate to stability, and many newer, smaller insurers have proven themselves just as financially stable as the big guns, and are perfectly able to meet their obligations. It’s good idea to do some research into the company, look at their financial strength ratings, look at their client feedback or complaints, look at their customer satisfaction track record etc.

You want a Life Insurance provider that can deliver on its promises, while providing quality service and value for money.   

CompareGuru has you covered.

During the pandemic, lockdown and beyond, CompareGuru recognises the uncertainty and anxiety you may be experiencing, and to do our part, we are offering the assistance and guidance of our expert Gurus at absolutely zero cost, to answer any and all questions you may have regarding the protection of yourself and your family.

NEED A CHAT? REACH OUT TO A GURU HERE

Our Gurus are assisting anybody with queries relating (but not limited) to the following: 

  • Life Insurance and Funeral Cover;
  • The insurance T's and C’s;
  • How best to structure your insurance at this critical time;
  • And any other queries, where possible.  
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