Know the differences between life covers

When employees are retrenched they're often disappointed to discover that they can't recover any of the premiums that they contributed to their group life policy.

This may seem unfair - that you can pay premiums for years on end and get nothing when you are retrenched - but it isn't.

That's because these are pure risk policies, which means there is no investment component.

All the money goes to covering the risk.

Credit life cover, on the other hand, would most likely pay out a benefit in the event of
retrenchment. Understanding the difference between group life cover and credit life cover will save you a great deal of disappointment and unfulfilled expectations.

Firstly, don't assume that you have either group life or credit life cover.

Group life cover is an "employee benefit". It may or may not be a term of your
employment.

No one is entitled to such a benefit, in the same way that you can't expect your employer to have a company sponsored retirement fund or make contributions on your behalf to a medical scheme.

Credit life cover, on the other hand, has nothing to do with your employer: it's your personal cover that you have to pay from your own pocket.