Understand how life insurance works, what shapes the right level of cover, and get guidance on term insurance and long-term protection solutions.
Life insurance is a contract under which an insurer agrees to pay a defined benefit to your nominee if the life assured dies during the policy term, in exchange for premiums paid by you. Some products also provide a maturity benefit if the policyholder survives the term.
The purpose is straightforward: to replace, at least in part, the financial support that would be lost if the person the household depends on were no longer there. What varies between products is the structure - how long cover runs, what is paid, and whether any savings element is attached.
The value of a life policy shows up at exactly the moment a household is least able to absorb a financial shock.
Tax treatment depends on prevailing tax law and individual circumstances, and may change. Please consult a qualified tax adviser for your own position.
The main structures available, and what each is generally intended to do.
Pure protection for a fixed term, generally offering the highest cover for a given premium.
Policies combining life cover with a savings or maturity component.
Structuring cover around the people who actually depend on the income.
Cover reviewed against life stages rather than fixed once and forgotten.
General information to help you frame the right questions before choosing cover.
Term insurance is a form of life insurance that provides cover for a fixed period. If the life assured dies during that term while the policy is in force, the sum assured is generally payable to the nominee, subject to the policy terms. Most pure term plans have no maturity value if the policyholder survives the term.
There is no single correct figure. People commonly consider income replacement for dependants, outstanding loans, planned future expenses such as education, and existing savings. Comparing those against cover you already hold gives a starting point for discussion.
A pure term plan is designed primarily to provide a death benefit at a comparatively lower premium. Savings- or investment-linked plans combine life cover with a maturity or investment component, and typically carry higher premiums. Which is appropriate depends on your objective.
Life policies generally do not have waiting periods in the way health policies do, but most include specific conditions - for example clauses relating to death by suicide within a defined initial period. Riders attached to a policy may carry their own conditions.
Premium and acceptance are based on the information declared - age, health, occupation, lifestyle habits and existing cover. Incorrect or incomplete disclosure can give the insurer grounds to reject a claim later, which defeats the purpose of the policy.
A nominee is the person you name to receive the policy benefit. Insurers generally allow the nominee to be updated during the policy term by submitting the required form. Keeping the nomination current is an easily overlooked but important step.
Holding cover from more than one insurer is generally possible. Existing cover normally has to be declared when applying for a new policy, as insurers consider total cover across all policies during underwriting.
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