Life Insurance Benefits

Life insurance benefits are the supplementary pure risk benefits attached to a basic life insurance policy and which remain available for as long as the policy is in force. The only exception is whole life insurance, where supplementary benefits normally expire when the policy holder reaches the age of 60 or 65.

Here follows a brief overview of the supplementary benefits you can commonly expect to find when purchasing a life insurance policy.

Waiver of premiums

This benefit allows your premiums to stop completely, and your policy to continue free of charge when you become permanently and totally disabled.

Capital Disability

If you become permanently and totally disabled, the policy will pay out as if you had died. The sum of money is usually either linked to the total sum of money you are insured for or to a part of it. There are two scenarios here: Accelerated and non-accelerated.

Accelerated: If you have R 500,000 life cover and a linked capital disability benefit of R 400,000, the insurer will pay you the R 400,000 should you become disabled. The remaining R 100,000 will be retained as life cover and become payable upon your death.

Non-accelerated: You will be paid out, the R 400,000 while your life cover value of R 500,000, remains intact.

Dread Disease

Dread disease covers a variety of conditions and runs for as long as the policy remains in force. Some of the diseases covered, include:

  • AIDS
  • Trauma (heart attack, stroke etc.)
  • Cancer
  • Blindness
  • Major Burns
  • Alzheimer’s
  • Downs syndrome
  • Parkinson’s
  • Aplastic anaemia
  • Benign brain tumours
  • Paraplegia
  • Coma

Should you contract any one of the dread diseases covered, the benefit becomes payable. Depending on your particular policy, the life cover will then either continue after payout or terminate completely.

The reason why this particular benefit is widely included by policy holders in their financial planning is that contracting a dread disease inevitably brings about major changes in one’s personal life and places severe strain on one’s finances.

Accident

If you have an accident cover benefit, it normally means that your beneficiaries will be paid an additional sum of money on top of the normal life cover you enjoy should you die as the result of an accident. This amount could be as much as double your current cover.

Some products take the accident benefit a little further and will also pay out for either the loss, or the loss of use, of limbs, hearing and sight.

Guaranteed Insurability

This benefit allows you to take out additional life insurance at specific points in time in the future, with the sum insured on the additional policies not exceeding the sum insured on the original policy. No proof of health, other than an HIV test, will be necessary.

Should the HIV test return positive, the guarantee will be revoked and you will not be allowed to exercise the benefit.

Disability

Disability in life insurance terms involves a policy holder becoming disabled – totally and permanently – as the result of an accident (such as a car accident) or as the result of a medical condition (such as Alzheimer’s).

Not all insurers’ disability benefits are the same. Some only cover accidents, while others only cover medical conditions. There may also be exclusions involved such as piloting an aircraft, undertaking hazardous pursuits, alcohol and drug abuse, criminal acts and acts of war.

Funeral

The funeral benefit is popular among policy holders in the lower income bracket, and is paid out as a cash lump sum as soon as the policy holder dies. The amount insured is limited to R 10,000.

In closing

Linking benefits to your existing life insurance policy is normally less costly than purchasing these as discrete, standalone policies. Be sure to check which options are available to you and what the costs will be the next time you undertake a review of your life cover