FAQ - Life Cover

When should I buy life insurance?

• Buy now
  One of the drivers of life insurance premiums is age. Therefore, the older you are the higher the life insurance premium. If you buy life insurance while you are young and deemed to be healthy, you can take advantage of a lower premium.
• Buy later
  Many individuals prefer to postpone the purchase of life insurance until such a time that they have dependants. It is important to ask yourself the question, will anyone suffer financially? It would be unwise to delay purchasing life insurance.

When does my life cover begin?

• Life cover begins once your application has been approved by the insurance company and your first premium due, has been paid.
• Important notice! If you are replacing an existing life policy, it is recommended that you do not cancel your cover until such time that the new cover has begun.

How much does it cost to take out life insurance cover?

• You will not have to incur any cost to take out life insurance. Where an event occurs that requires the payment of expenses, e.g. medical test, your insurer will cover such costs.

What does insurable interest on a life insurance policy mean?

• If you are going to buy life insurance on another person’s life, you have to consider whether you have an interest in that person remaining alive or whether you would suffer an emotional or financial loss from that person’s death. If the answer is yes, then you are likely to have an insurable interest.
• When you buy insurance on someone else’s life, an insurable interest can be established if you have a sufficiently strong relationship with that person. A typical example would be a husband-wife relationship or debtor-creditor relationship.

Will I pay a higher premium if I participate in extreme sports?

• When it comes to extreme sports, most life companies have different ways of analysing their risk. The risk associated with extreme sports is considered to be a cost driver and will therefore result in increased premiums as determined by the underwriters. Resolution Life however does not charge an extra premium for this.

How much life insurance is enough?

• Most experts indicate that you need cover of at least ten (10) times your annual salary. It is recommended that you perform a proper financial needs analysis to determine what your required cover value should be.

Will I be allowed to make any cash withdrawals on my life insurance policy?

• Cash withdrawals on life insurance policies are possible if that policy has a saving option linked to it. In the case of a pure life policy you will more than likely not have a saving option linked to it and therefore, the policy will have no cash value available for withdrawal.

Should I change from one life insurance company to the next every couple of years to save on premium?

• Some insurance agents recommend this as a way to take advantage of the company's promotional rates in the first couple of years. However, this involves the risk that you would be subject to a new underwriting assessment period. You start a new disclosure period every time you switch. It is generally two years. If you die during this period, the insurance company can (and probably will) investigate the statements you made on your application. If you've given inaccurate or incomplete answers, the company may (and probably will) refuse to pay the death benefit.

What is Term Life Insurance?

• Term Life Insurance is the simplest, and usually the cheapest, form of life insurance. Term Life Insurance provides protection for a specific period of time. It pays a benefit only if you die during the term. If you are living at the end of the term, the policy expires without value. It is sometimes called temporary life insurance.

What is Whole Life Insurance?

• Whole Life Insurance gives you lifetime coverage at a premium rate that does not increase with your age after you buy. In the early years of the policy, when you're a low risk, you'll pay more in annual premiums than it costs to insure you.

Are the proceeds from a life insurance policy taxable?

• The proceeds from a life insurance policy are not taxable because of their nature. The proceeds are of a capital nature and are therefore not taxable as income. All proceeds that are of a capital nature are subject to Capital Gains Tax. However, the proceeds from a Life Insurance policy is exempt from Capital Gains Tax.