What is Life Insurance policy

Life Insurance is a contract between you and a life insurer that provides financial protection if you pass away. Depending on the policy, it can also include cover for disability or dread disease, and may help with funeral-related costs so your family is not left under financial pressure.

There are four main parties: the insurer (provider), the insured (the person whose life is covered), the beneficiaries (who receive the payout if the insured dies), and the policy owner (who pays the monthly premiums). In some cases, the insured and the policy owner are the same person, but not always.

Beneficiaries are paid out when the insured passes away (if the claim is valid and the policy is active). However, if your policy includes dread disease or disability cover, the payout may go to the policyholder instead of beneficiaries, because the insured is still alive and needs the financial support.

Yes, possibly. A dependant is not only a child. It could be a spouse or ex-spouse, parents, extended family, a business partner, employees, or any adult who relies on your income. Life Insurance is designed to protect anyone who would face financial hardship if you were no longer around.

Yes. Many people use Life Insurance to cover outstanding debt such as a bond, vehicle finance, or personal loans. In some cases, Life Insurance is required when taking out credit, and credit life cover may also be added to certain credit agreements, so it’s important to understand what cover you already have.

Always check the exclusions and waiting periods in the policy contract. Different insurers apply different rules. Some may not cover certain causes of death or may only cover them after a set period. You should also check whether your policy includes benefits like disability or dread disease cover if those risks apply to your lifestyle or occupation.

Term Life Insurance covers you for a fixed period only, while permanent Life Insurance is designed to cover you for as long as you keep the policy active. Term cover can be cheaper, but it only works if you’re confident you won’t need cover after the term ends. Permanent cover offers longer-term financial protection.