Life insurance provides a lump sum payment (the death benefit) to your nominated beneficiaries when you pass away. It ensures that your loved ones can maintain their quality of life, pay off debts, cover funeral costs, and meet ongoing living expenses after you’re gone.
What it covers
- Lump sum death benefit to nominated beneficiaries
- Terminal illness benefit (accelerated death benefit with many policies)
- Funeral and burial expenses
- Outstanding debts and mortgage repayment
- Ongoing income replacement for dependents
- Children’s education costs
- Estate planning and inheritance tax management
What it doesn’t cover
- Suicide within the first 24 months (standard exclusion period in most jurisdictions)
- Death from high-risk activities not disclosed at application
- Fraudulent or misrepresented information on application
- War or acts of terrorism (specific policy exclusions vary)
- Death from pre-existing conditions not disclosed
Types of life insurance
- Term Life Insurance — Coverage for a set period (10, 20, or 30 years). Most affordable option.
- Whole Life Insurance — Permanent coverage with a cash value component that grows over time.
- Universal Life Insurance — Flexible premiums and death benefits with investment-linked cash value.
How to choose
Calculate how much coverage you need using the DIME method (Debt + Income + Mortgage + Education). Compare term vs permanent based on your age, budget, and long-term goals. Younger, healthier applicants secure lower premiums — it’s generally wise to lock in coverage early. Always disclose your full medical history to avoid claim denials.