FAQ

• 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.
  
  

• 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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

The purpose of Capital Disability insurance is to replace the loss of income that arises when the life assured is found to be totally and permanently occupationally disabled due to bodily illness or injury.

The Capital Disability policy will stipulate when you are eligible to begin receiving benefits. Your cover usually begins once your application has been approved by the insurance company and your first premium due, has been paid.

No. Capital Disability normally has a maximum benefit end date of sixty five (65) years of age. If you have an existing Capital Disability insurance policy, your cover will cease before the life assureds sixty fifth (65th) birthday.

You are totally disabled if you cannot perform any of the normal functions required by your occupation. If you can perform some, but not all of the functions of your job, you are partially disabled or impaired in some way.

Some disability policies have a provision for partial disability. Whether or not your disability policy covers partial disability depends on the details of the specific policy. This type of cover is usually called an impairment benefit and is linked to a percentage of whole person impairment classification criteria.

When you buy Capital Disability cover as a standalone your premium will be higher than when you buy Capital Disability cover together with Life Cover. This is because all operational expenses are shared by the products when you purchase life insurance and disability cover. On the flip side, when you only purchase disability cover, that single product covers all the operational cost.

You buy the policy, select the benefit levels, and pay the premiums yourself. The plan is not based on you continuing to work with your current employer. Unlike workmen's compensation, it is not limited to work-related disabilities.

It depends on why you are buying the insurance. If you only expect to need the coverage for a few years, until your mortgage is paid off or your child finishes college, for example, a rising premium policy (one where the premiums increase as you get older) would be appropriate and would minimize your immediate outlay of money. You could then consider dropping the coverage when you no longer need it. Increasing premiums might also be appropriate if you expect to have much higher income in a few years and you want to minimize the cost in the first few years.

On the other hand, if you need disability insurance for a long term (say, until you retire) you should consider a level premium policy. Here you will be paying somewhat more in the early years to keep the premiums from rising as you get older.

Yes. Since it was accidental, you qualify even though it was your fault. If it was intentionally self-inflicted, and not an accident, you’d usually be unable to claim.

No. Disability insurance protects you from loss of income when you cannot work. But investment income and other unearned income are not dependent on your ability to work for a living. They continue even if you are disabled, so they are not normally insurable under disability plans.

It depends on many factors, including the amount of critical illness cover, the policy term and what occupational definitions are used.

Yes. Insurance underwriters consider various factors when considering your eligibility and setting an appropriate premium for critical illness cover. One of these factors is your smoker status. Smoking is related to many illnesses which could cause disability and so will be a factor to be considered in setting your rates.

No. Capital Disability policies provide a lump sum payout because you have suffered a major illness. That said, once you receive a payment for disability, the money can be put to whatever use you choose. To specifically cover rehabilitation expenses, you need to look into medical care insurance.

You should ask yourself the question, would I or any of my dependents face financial difficulty when I become critically ill? If the answer to this question is yes, then you should consider buying Critical Illness Cover. Critical Illness Cover aims to give you peace of mind in these circumstances.

Different policies cover different critical illnesses. The critical illnesses that are covered by the insurance company will be listed in your policy document.

You should keep in mind that the heading of each critical illness is only a guide to what is covered. The full definition under each heading will indicate what your policy covers.

The model definitions are generally grouped into “Core” and “Comprehensive” conditions. The “Core” conditions are usually the critical illness most likely to happen.

You can choose Critical Illness cover as a standalone product or you can select Critical Illness cover as an additional benefit to your life insurance policy. This usually means that the policy pays out if you suffer a critical illness. These plans generally pay out a once off lump sum value.

No. Critical Illness cover normally has a maximum benefit end date of sixty five (65) years of age. This means that cover will cease before the life assureds sixty fifth (65th) birthday.

It depends on why you are buying the insurance. If you only expect to need the coverage for a few years, until your mortgage is paid off or your child finishes college, for example, a rising premium policy (one where the premiums increase as you get older) would be appropriate and would minimize your immediate outlay of money. You could then consider dropping the coverage when you no longer need it. Increasing premiums might also be appropriate if you expect to have much higher income in a few years and you want to minimize the cost in the first few years.

On the other hand, if you will need Critical Illness insurance for many years (say, until you retire) you should consider a level premium policy. Here you will be paying somewhat more in the early years to keep the premiums from rising as you get older.

How you use your benefit is entirely up to you. It may indeed be used for paying your medical cost or for settling debt. It can also be utilized to pay for childcare or basic living expenses.

Critical Illness policies give you the time to come to terms with your condition and decide what changes you want or need to make to your life.

You should follow the following pointers:

• Read the small print to get an understanding of what you are buying and what is covered.
• You want a product that will pay a lump sum should you suffer from one of the diseases covered.
• Check whether premiums are fixed or can be increased by the insurance company every few years after a review.
• All insurers should provide you with a schedule of the key features of the product that you purchase.
• Enquire whether an assessment or payment deferred period exists on the product.

The proceeds from a Critical Illness policy are not taxable because of its 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 Critical Illness policy are exempt from Capital Gains Tax.

Income Protection is an insurance product that provides you with a monthly income if you become unable to work because of an occupational disability, giving you time to recover. The monthly income benefit will be paid until such time that the insured individual recovers from his/her disability, dies or reaches a specified maximum age.

Before you decide on whether you need this benefit you have to consider the following:

• In the event of you being unable to work for an extended period of time, will you be remunerated and what amount will it be?
• Will your remuneration, while being disabled, cover all your monthly expenses?
• Will you require additional funds, other than your salary, to cover unexpected expenses?

You should follow the following pointers:

• Read the small print to get an understanding of what you are buying and what is covered.
• You want a product that will pay when you need the benefit. Find out what the prohibitions of the product is.
• Check whether premiums are fixed or can be increased by the insurance company every few years after a review.
• All insurers should provide you with a schedule of the key features of the product that you purchase.
• Enquire whether an assessment or payment deferred period exists on the product.

The proceeds from Income Protection insurance are deemed to be income in nature and will therefore be subject to normal income tax as levied in accordance with the Income Tax Act.

On the flip side, the monthly contributions paid by the life insured are deductible for income tax purposes.

Yes. Being off work until your leg has healed would require a period of recovery and absenteeism from work.

No. Income Protection usually has a maximum benefit end date of 60 years or 65 years of age. If you have an existing Capital Disability insurance policy, your cover will cease before the life assureds 60 or 65 birthday depending on which policy was taken.

Future Cover is an additional product that allows the owner of a Life Insurance- or Disability Cover Policy access to increased cover without undergoing any medical underwriting. Also know as guaranteed insurability

No. Future Cover has a maximum benefit period of three (3) years. Therefore, the life insured has to exercise the option before the end of the three (3) year period. Upon completion of the three (3) year period, the benefit will lapse and the life assured will have to undergo medical underwriting if he/she wishes to increase his/her cover value.

Yes. However, insurance companies do place a minimum value on the percentage of increase that you need to exercise at stage. The most common minimum required percentage increase per increase interval is 25% of the initial cover value.

No. The Future Cover option is usually only available as an ancillary on Life- and Disability Insurance products.