Life Insurance: A complete guide in South Africa 2023

Life Insurance

Life insurance is a life cover that normally covers an individual from R100,000.00. The life cover amount can be up to any amount, however, many insurers in South Africa provide life insurance cover to the value of R20,000,000.00. Premiums on a life insurance policy can start from R80.00 per month. 

A life insurance policy can also include a funeral benefit that pays out within 24 hours from making a claim. A funeral benefit can range between R5,000.00 to R50,000.00 depending on the insurer that you want to use. Funeral benefit does not apply to all life insurance plans in South Africa. 

A life insurance policy can include a terminal illness benefit whereby a policyholder receives 100% of their cover amount should he/she gets diagnosed with a terminal illness. This offer is available to policyholders that are expected to live for no more than 12 months. 

A life insurance policy is a popular insurance product in South Africa. To help you understand this product, we’ve listed the features of a life insurance policy below.

Important facts about life insurance:

  • Life insurance is a legal binding agreement.
  • The insurance policy expires upon the death of a policyholder.
  • For the agreement to be enforceable, the life insurance application must accurately disclose the policyholder’s past and current health conditions.
  • When the policyholder dies, the beneficiaries of the life insurance will receive the face value of the policy.
  • For the policy to be enforceable, the policyholder must pay at least a single premium upfront or regular premiums over time. Note that some deaths are covered over time.

Reasons for a Life Insurance

Life insurance will in most cases secure the lifestyle or wealth of your family when you pass on. In some cases, your family get to be in a better financial position after you die.

There are multiple reasons why you need a life insurance policy. Here are the reasons why you may need it :

  • You may want to leave money to a charitable cause, pay off your home loan or leave an inheritance.
  • Have your family maintaining their lifestyle when you are not there to do it yourself.
  • To pay for funeral expenses or cover debts such as medical bills.
  • So that your home loan can be fully paid should you die.
  • Build a long-lasting investment for your family that will last for some generations.

Who should buy a life insurance policy?

As an adult, you want to make sure that your family is well off all the time even when you are dead. Most importantly if you are a breadwinner, you want to make sure that your family maintains the same lifestyle should anything happen to you. With a policy, your dependents and beneficiaries will have financial support courtesy of the life insurance payout.

Here are examples of people that may need it:

Parents with kids with special needskids with special needs require lifelong care and this costs money.

Since kids with special needs are unable to provide for themselves to a certain extent it is wise for their parents to ensure that their needs are catered for in their absence.

Parents with a minor – as parents you take care of your kids no matter the circumstances.

Should you not be around to cater to the needs of your child, they still need to live a bitter life.

It is a great choice to ensure that a minor child is able to live a good life in the absence of his or her parents.

Married pensioners – paying a life policy as married pensioners can benefit the surviving spouse greatly. The surviving spouse can then afford to live in a good old age home.

Business with key men – with the absence of a key employee a business can perform badly. To have a financial caution to fall on, a company needs to take life insurance cover for its key employees.

Young adults with loans – if you have taken a home loan as a young adult that loan can be covered by your insurance should you die. This way your estate won’t be sequestrated.

Types of life insurance policies in South Africa

Term life insurance

This insurance policy option has a limited lifespan. It is the most uncomplicated one out there as it is inexpensive and has a fixed term.

The term insurance policy is purchased for a specific length of time which is usually between 10 – 30 years.

This one has no cash value and expires at the end of the term. Note that if you want to renew a term policy, premiums may increase.

After the term, the policyholder is paid back his or her premiums and may include some expenses.

Whole life/ permanent insurance

This type of is permanent of nature, unlike term insurance you cannot benefit as a policyholder.

Whole life insurance has set premiums. Payments of the premium amount are monthly and life long.

The policy will stay in place as long as you keep on making payments. Policy premiums are fixed for the policyholder’s whole life.

Some whole life covers allow for payout in the event of critical illness and disability.

Universal life insurance

This is a type of a whole life insurance policy but also offers an investment option.

Premiums on universal policy do not necessarily stay the same as they fluctuate over time with regards on how you want to manage it.

If a policyholder deposits an extra amount on the premium, that extra amount is an investment and will earn interest.

How much insurance cover do you need?

Your amount of insurance cover should correlate with what you want to achieve when taking a policy.

If you want your life cover to cover your home loan should anything happen to you, then the amount of life cover should be able to cover your home loan at net present value.

However, figuring how much insurance cover you need shouldn’t be much of a problem.

With the help of an advisor from any insurance house you will have a step to step guide on how much cover you need.

For a reputable policy provider, you can check out these life insurance providers: Sanlam, Momentum, OUTsurance and Liberty Life.


Life insurance provides a sense of comfort in times of pain and worry. Having one means that your beneficiaries and dependents will bare little or no financial burden should you die. This is what most would actually want or imagine for their loved ones.

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