Unlike many other types of life policies, pure life insurance over does not come with a host of supplementary benefits. Pure life cover is exactly what it says: it only pays out upon your death.
Costs of a Pure Life Insurance Cover Policy
Insurers base their rates calculations on the likelihood and the estimated timing of the event, or risk if you like, that they are asked to insure. With a pure life policy, the insurer need not factor in any of the peripheral risks such as disability, dread disease, waiver of premium or trauma when determining their rates. Nor do they need to perform any projections around end of policy term payouts. It is this no frills, no fuss characteristic of a pure life policy that causes the cover it provides to be considerably cheaper than that of its stable mates.
With premiums starting at about R75 per month, pure life cover makes it attractive for those of you who need life cover at a lower rate.
Use of Pure Life Insurance Cover
When you take out pure life insurance, you contract with the insurer to pay a predetermined lump sum to your beneficiaries upon your death, in exchange for you paying across your insurance premiums at required intervals.
With pure life insurance, many insurers nowadays offer you the option to take the insurance for a specific term that could end before you die. In other words, you could either choose to let the policy run for ten, fifteen or twenty years or until you reach a specific age, such as age fifty five or sixty.
This option is quite handy if you need additional cover for a limited period. For instance: A single parent may have two children in high school and feels the need to have extra life cover for the next ten years to ensure that the children are cared for should anything happen to him or her during that time. With pure life insurance the parent can purchase the required cover at an affordable rate.
Features of Pure Life Insurance Cover Policies
Pure life insurance cover policies will normally cover you for both natural- and accidental death. Although under most of these policies your beneficiaries will immediately enjoy 100% cover should you die from accidental causes, natural death may be subject to a sliding scale
For instance, if you died from natural causes within the first six months of taking out the policy, your beneficiaries might only receive a payment that comprises of the premiums you have paid to date; after 12 months, 50% of the death benefit; after 18 months, 75% and after 24 months, 100%. Death by suicide is also usually excluded completely for at least the first 24 months.
It is vital that you read the fine print in this regard.
Built-in Benefits of Pure Life Insurance Cover
Although there are no supplementary benefits, some insurers have added some sweetening to the package. These could include that you may still enjoy cover for six months after stopping your premiums; that you may be able to resume the policy even if you have not paid it for six months or longer; and that you could, after ten years, stop the policy and still enjoy 50% of the death benefit thereafter.
If the single parent in the example we quoted under Use of Pure Life Insurance Cover, decided to purchase cover (from an insurer who offered this option) for the duration of his or her life as opposed to for a ten year period, he or she could remain covered for 50% of the death benefit even if he or she makes the decision to cancel the policy after ten years.
When you complete the application form, you will be asked to provide details surrounding your health, that of your siblings and that of your parents. It is vital that you are completely honest. The insurer is likely to find out sooner or later if you were not completely truthful and, should you die from a medical condition that you are suffering from but failed to disclose, your beneficiaries may not receive the insurance pay out and that defies the objective of having had any life insurance in the first place.