Life Insurance

Life Insurance (sometimes referred to as Term Insurance or Death Cover) provides a lump sum benefit payment in the event of death or if you are diagnosed with terminal illness (and not expected to survive more than 12 months). Death from suicide in the first 13 months from commencement of Policy (or reinstatement of Life Cover Policy) is generally excluded.

The Benefit amount is paid to the nominated beneficiary or the Policy Owner in-case of Terminal Illness. The Policy Expiry Age in most cases is age 99-100. 

Life Insurance offers you financial security to protect what you care about. Funds received from the Life Insurance cover can be used to pay off any existing mortgage and/or other personal debts; which means that your family will not have to worry about clearing huge debts and also help to pay for funeral expenses and final medical bills. Life Insurance is equally important to provide family members a little time off to grieve properly, to get their lives back on track and not have to go back to work soon after having lost a loved one. 

• Tax treatment
  Life Insurance premiums are generally not tax deductible but the lump sum benefit payment received is tax-free to the beneficiary.
• How does Life Insurance work?
  Sam was 37 years old when he took out an insurance policy and made the policy owner his wife, Simone, a housewife. Sam thought he would never need it but was influenced by a friend who had recently taken out some insurance. He sought the advice of a financial planner who stressed the importance of insurance, especially because he had a wife and 2 children who depended on him financially. Five years after the policy was taken out, Sam developed swollen ankles. There was no indication of any injury or fractures and the swelling did not go down for a couple of months. Further specialist tests indicated leukemia. Sadly, Sam lost his battle with leukemia 2 years later. Although devastated, Simone was able to cope financially because Sam's life insurance paid out in full.
  
  Sam was insured for $800,000 which Simone allocated as follows:
  
  
  • $200,000 to pay off the mortgage
  • $50,000 in funeral and medical expenses
  • $50,000 in Investment Bonds for the children's future
  • $100,000 saved aside as living expenses for the next 15 months
  • $400,000 into a mixed group of investments to earn 6-8% per annum, where the capital is drawn down over 15 years, with around $40,000 each year to live on.