Life assurance guarantees that your family will be taken care of financially in the event that you become disabled or die. If you become unable to earn a living, life assurance will provide for your dependents by paying out a lump sum to cater for their future needs, current living expenses and debts.
The different types of life assurance are categorized according to the duration of the payment term and the savings option they come with. Most life assurance policies come with extras such as disability and dread disease cover. When choosing a life assurance policy, compare the extent of the cover and the additional cover.
Permanent life assurance
For the duration of the policyholder’s life, permanent life assurance pays out on the death of policyholder. A savings portion can be added to the policy so it can function as a loan account. Money may be borrowed from a permanent life assurance policy. This type of life assurance is not commonly offered by short-term insurers.
Temporary life assurance
Some life assurance does not last for the duration of the policyholder’s life, but rather for a shorter period of time usually to meet the terms of a contract. For example, the financiers of a house require their clients to take out a life assurance policy while the house is financed. Temporary life assurance may be taken out for the duration of the mortgage.
Pure life cover
Similar to permanent life assurance, pure life cover lasts for the duration of the policyholder’s life but does not include a savings portion. Pure life cover may not be borrowed from. Some short-term insurers offer this type of life assurance even though it’s long-term.