A Life insurance policy pays a lump sum (based on the policy's terms and conditions), after your death, to provide for your family or settle any debt (i.e. outstanding amount on your car or home).  Some life policies allow you to include disability cover.

A wide spectrum of life cover is available in the South African market.  Term Life insurance or Credit Life Cover would be ideal if you only want life cover for a certain period of time, i.e. while paying a bond on your house.

Term Life insurance is relatively cheap, but does not have an investment/cash value.  When the agreed cover period have passed, the cover merely expires.

Whole Life Cover expires after the policy holder's death or when you surrender the policy.  Your premium is invested by the insurance company and you can borrow against the policy as soon as it has a cash value.

Universal Life Cover has an investment component included.  Your return on investment depends on the performance of the investment.  The growth rate is not guaranteed, but rapid growth is a possibility.

How much is enough?

Deciding how much really just depends. If you're single with no dependents, you probably don't need any at all. The key time to get Life insurance is when you have children. In addition, get coverage if you have a spouse who doesn't work. (See the video "How much life insurance is right?")

A rule of thumb for life insurance is five to 10 times your annual salary. MSN Money's estimator of Life insurance needs can help you decide how much coverage you should have. (Also see the video "A lifetime of life insurance.")

For a complete personal needs analysis and financial planning assistance, contact one of our Financial Planners or adviser.

Consider these tips:

• Don't buy Life insurance for young children. It's largely wasted because you're not replacing income. (See "Insurance plans you can avoid.")

• Look at your budget before committing to a premium. When you buy Life insurance, you have to keep paying the premiums throughout the term, no matter what, or lose your coverage. (See "Your 5-minute guide to budgeting.")

• Don't let a policy lapse if you plan to buy another one at some point. A high number of lapses could indicate financial instability. (See "The effects of lapsing on your policy.")

• You might be able to drop your Life insurance if your children are grown and your spouse has income.

• An insurance policy is only as good as the company that backs it, so check out a company's financial rating before signing on. Avoid advisers who say the ratings are unimportant or unavailable.

• If you are single and simply don't want your relatives burdened with the cost of a funeral, consider contributing to Funeral Plan. 

For Quotes or an analysis of your needs contact us on 011 326 0955