Life cover can come in handy when life throws us unexpected curveballs that can have a major impact on us and our loved ones.
It is possible to place a claim on your policy while you are still living, but is it possible to ask an insurer to give you a cash payout from your life insurance policy? Here is what you need to know.
Can you cash out a life insurance policy?
Cover amounts in South Africa differ from insurer to insurer with most starting from R500 000 - R10 million to offer you and your loved ones a financial safety net. However, it is not possible for an insurer to give you a cash payout. There are some circumstances where policyholders will be able to place a claim on a policy to make sure that they can handle the financial costs that comes with some of life's unexpected moments.
When can you place a claim?
The only time when a policyholder will be able to place a claim on their policy is when you have been diagnosed with a terminal illness. What this means is that you will have to be diagnosed by a medical professional before submitting your diagnosis as proof. When your claim has been approved you will be given the option of using 50% - 100% of your cover amount. It's important to keep in mind that if you do decide to use 100% of your cover amount to help you and your loved ones, your policy will be closed. You can always open a new policy should you recover.
What else can you use your cover for while you are still living?
Did you know that you can use your policy as surety against a home loan? One thing lenders will look at when giving anyone a loan is assessing if you will be able to pay off the loan, even in the event where you die. While you may be planning on living for a long time, your lender still needs to be 100% sure that you can pay the loan back.
Having a life insurance policy in place doesn't only prove that you are responsible, but it also gives a thumb’s up to your lenders that you have made a plan to ensure that the loan is paid even in the event of your death. But before you use your policy as surety, make sure that you understand the conditions that come with doing this, which you can learn about here.
