Understanding life insurance

Why you need life insurance

 Life insurance helps to protect you and your family against financial loss. Find out why you need life insurance and how to assess how much insurance you should buy. The primary reason we buy life insurance is for protection — it can provide financial back-up during emergencies when we pass on or become totally and permanently disabled.

 Some life insurance products bundle insurance with an investment component and can be used to provide for your retirement income or to accumulate savings to leave behind for your loved ones. These will cost more. A life insurance policy is a contract between you and an insurance company. In return for the benefits provided by your policy, you pay a premium for an agreed duration.

 There are 2 main categories of products:

  • Term insurance – Sometimes called unbundled products as they provide you with protection coverage for a fixed period of time without any investment feature.
  • Bundled products – Refers to whole life and endowment policies as well as investment-linked policies (ILPs) as these provide for protection and investment.

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