What life insurance doesn’t cover

Posted  June 11, 2019

Life insurance pays your loved ones when you pass on, but what about if you are ill or injured?

Life insurance gives your family financial security when you are no longer around to care for them. But you need to know that there are certain things that aren’t covered by your life insurance policy. We take a look at what’s covered and what’s not, and what you can do to make sure your family is well-protected.

When your life cover policy paysYour 1Life Pure Life Cover policy will pay out in two circumstances:

  • The life assured passes on, OR
  • The life assured is diagnosed with a terminal illness and has less than 12 months to live.

A pure life cover policy is a policy that pays out in the event of death due to an accident and natural causes. Some life cover policies only pay out if death is caused by an accident. You can check if you have a pure life cover policy or a life cover policy that only covers accidental death on your policy schedule.

How the policy pays
A 1Life Pure Life Cover policy pays out the amount that is stated on the policy schedule on the death of the life assured if all the contract conditions have been met. When a valid claim is made the full amount is paid in one payment, so there are no monthly payments or payments spread over a period of time.

Who is paid?
Life insurance pays out to the beneficiary, so whoever is listed as a beneficiary on the policy will receive the pay-out. There may be more than one beneficiary.

There is one exception – if the life assured is terminally ill and claims in the last 12 months of their life, the claim is paid to the life assured.

When your life cover policy does not payLife cover pays out specifically in the case of death, and it does not cover other events like illness or disability that could leave your family in financial difficulties.

Temporary or permanent disability
Let’s say you become disabled and can no longer work. This is a big life change that can leave a permanent dent in your finances. Because this isn’t a death, pure life cover won’t pay out. But disability insurance could.

Disability insurance can be taken as a lump sum amount where a lump sum will be paid if the life assured becomes permanently disabled. Income protection, such as Expense Protector, is also a form of disability insurance because if you are temporarily unable to work due to illness or injury, it will pay a portion of your salary each month.

So, the good news is that there is an alternative way to make sure your family finances remain in good shape if you become disabled.

Serious illness
Another life change that happens far too often is that the breadwinner becomes seriously ill, sometimes too ill to work. In addition, treatment is expensive, even with medical aid. In this case you would need your finances to stretch to cover the normal cost of living and extra care and treatment.

Dread disease insurance insures you for a lump sum amount and pays that lump sum amount on diagnosis of a serious illness. Dread disease is a boost to your finances when you most need it, and when life insurance doesn’t cover you.

Final thoughtsInsurance shouldn’t be complicated. The bottom line is, 1Life Pure Life Cover pays claims on the death of the life assured. We’ve got policies to cover disability or dread disease, too. You can add them to your existing life cover or take out new policies for these events. Speak to your broker or contact us for a quote.

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