Long-term insurance refers to a range of insurance products that provide you either with an income in the long term – usually when you retire – or a lump sum of money should you become permanently disabled or pass away.
In general, long-term insurance usually refers to products such as life insurance, personal accident insurance, retirement annuities and endowment policies. So, which of these types of insurance do you need? In this article, we talk about the features and benefits of each.
Life Insurance
When you pass away, life insurance pays out a lump sum of money to your nominated beneficiary, which is the person or entity you choose to receive the money. Life cover is a good idea if you’re the main breadwinner and have dependents who rely on you for financial support. Should you pass away, you’ll know that your loved ones will be left financially secure and that any financial obligations such as a home loan will also be covered.
Personal Accident Insurance
If you’re fit and healthy, you may not be able to imagine a time when you’re not able to work and provide an income. The reality, however, is that if you become disabled, you may not be able to work and earn money as you did before - if at all. If this happens, you’ll still need to cover your monthly living expenses.
Also known as accident and disability cover, personal accident insurance pays you out a lump sum should you be permanently disabled as a result of an accident. The overall aim of this type of long-term insurance is to keep your standard of living the same as before you were injured.
Retirement Annuities
A retirement annuity is a savings plan that provides you with an income once you’ve retired. These annuities work by you paying a monthly contribution in exchange for money back when you retire, either monthly, quarterly, annually or in one lump sum. Retirement annuities are ideal if you don’t already have an active pension or provident fund, or even if you just want to have more money available when you’re not working anymore.
As far as long-term insurance goes, retirement annuities have good tax benefits in that you can deduct a portion of the money you pay towards the annuity each month from being taxed. They’re also a good way to save because you can’t access the money until you retire.
Endowments
An endowment policy is a type of long-term insurance policy that pays out a lump sum at a defined future date, or earlier, should you die before that date. In this way, you can think of an endowment policy as a mix between a retirement annuity and life insurance cover.
The main benefit of an endowment policy is that if you live longer than you think you will, you’ll have a lump sum to use in your retirement to supplement a retirement annuity. But, should you pass away prematurely, you’ll know that your loved ones will be financially secure.
As one of South Africa’s leading insurance providers, Hollard offers a wide range of long-term insurance products. Interested? Read more about our retirement annuities, life insurance, personal accident insurance or endowments. Or, find a Hollard broker today.
Hollard Life Assurance Company (Reg. No. 1993/001405/06) is an authorised Financial Services Provider.
