Life insurance can be either whole life or term and is simply an insurance policy on your life. You purchase a life insurance policy from a qualified provider, paying them a premium. The premium is either paid monthly or in a lump sum (usually annually or every six months). The insurance company then agrees to pay an agreed upon amount of money after the insured person dies. The amount of money paid from a life insurance policy goes to the policy’s designated beneficiaries in a lump sum payment. If no beneficiaries are designated, then the payment is made to the estate of the deceased.

There are two kinds of life insurance policies: Term insurance policies, also called protection policies. Term insurance is temporary, for a set term of years, providing your family with coverage for a specific number of years for a set premium (although premiums typically go up as you get older).

Term life insurance does not accumulate cash value. When you buy term life, you are just buying your family or loved ones or business partners protection in the event of your death.

Whole life, also sometimes called permanent life insurance. The objective of whole life insurance is to accumulate money through the payment of regular or lump-sum premiums on which interest is paid, while also providing coverage in the event of death. Whole life coverage is sometimes also called permanent life insurance. The premiums you pay for whole life do not change, and there is a fixed, guaranteed cash value for the policy. The funds accumulated from the payment of premiums each year can be paid to you whether or nor you die, for emergencies, vacations, retirement, or other expenses. If you take these funds for other purposes, of course, they are not paid when you die.

The type of coverage you buy generally depends on the goals you want life insurance to accomplish. Many people find that term coverage suits their needs, if they just want to make sure that their bills are paid and that their heirs receive some cash after their deaths. Other people want a reliable source of cash accumulating year after year as they pay their premiums. You can speak with qualified life insurance agent to determine which kind of policy is best for you.

Life insurance policies typically pay on death, although they may also cover dismemberment or certain serious illness, such as heart attack or cancer, and provide additional benefits in the event of accidental death. It all depends on the particular policy you buy. Proof of death, injury, or illness is always required before the insurance company makes payment, regardless of the type of policy. Remember, before you are covered, you first have to get a physical exam from a company-approved doctor, so the company has an accurate picture of your medical history. Even after you pass your physical and your application is approved, your coverage does not start until your premiums are paid. Once your application is approved and your premiums are paid, only then is your policy is activated.

Life insurance usually covers death, dismemberment, accidental death and serious illness, depending on the type of policy purchased. Proof is required in all cases before payment will be made on any life insurance policy, regardless of the policy type. To purchase life insurance, you will need to get a quote from a qualified insurance provider, give an accurate picture of your medical history and receive a physical examination from your doctor. Once you pass your physical exam and your medical history is approved, a premium is required. After the premium is paid, then your life insurance policy is activated. A qualified insurance provider can also answer any specific questions you may have, as well as help design and tailor a life insurance program to help meet the needs of you and your family.

Tom Martens is the content syndication coordinator at Lifeinsurance-Southafrica.co.za, South Arica’s leading Life Insurance portal.