What is Life Cover?

What is Life Cover/Insurance?

Life insurance or life cover pays out a tax-free lump sum if you die during the term of the policy. It’s possible to have single life cover, where only one person is insured, or joint life cover or dual life cover, where two people are insured under the one policy.

Do I need Life Cover?

Like most insurances the answer to that question depends very much on your personal circumstances. For example, if you have no dependents or anyone who relies on your income, then you more than likely do not require life cover. Some people may have cover through work or a pension plan, so they usually do not require additional cover.

If you have dependents or someone who relies on your income such as a spouse, then you more than likely need life cover.

It is always recommended to talk to a financial advisor before purchasing cover so that they can perform a full financial review to ensure you are making the best choice for you.

How much Life Cover do I need?

Similar to the above question, this all depends on your circumstances.

If you have a young family or an outstanding mortgage, you more than likely would want a higher amount of life cover to ensure that your children are supported, or your mortgage payments are covered in case of an untimely death.

If you have an older family or don’t have high outstanding debts, then you may need a lower cover amount. It’s all subjective.

Is Mortgage Protection the same thing as Life Cover?

Generally not, mortgage protection is designed to pay off your mortgage if you die but does not provide a cash sum to your dependents. 

Mortgage protection protects the banks, life cover protects you and your family.

What happens if I don’t die during the insurance term?

Well it’s great you didn’t die but all that money you’ve put in to the policy is now gone.

Currently, there is a plan available in the market which will pay out a reduced sum when you die, even after the plan has finished. Here’s an example of how this works: In this plan, you pay your premium every month for the term of the plan. The term of the plan is a set time period (eg. 20 years). Once this time period elapses, you stop paying the premiums but a portion of the cover continues until each policy holder dies meaning that your dependents will receive a tax free lump sum upon each of your deaths.

How do I get Life Cover?

Contact one of our advisors today and we’ll organise a financial review for you and find the best plan for you.


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