The importance of life insurance

Life insurance safeguards you and your family from financial uncertainty that comes with severe illness, disability, or death.

What is Life cover

Having life cover in place is important to ensure a better future for your loved ones in the event of your death. Life cover can ensure that there will be sufficient liquidity in your estate to take care of your financial responsibilities when you pass away, but also thereafter. 

Firstly, life cover will ensure that your surviving spouse, partner, nominated beneficiary or your children can settle debt if you pass away, for example:

  • A mortgage bond;
  • Outstanding loan on a vehicle;
  • Credit card debt;
  • Store card debt.

Life cover will provide liquidity to settle your estate, pay your final taxes, and transfer your assets to your heirs.

Secondly, life cover can also ensure that your family is financially looked after in the event of your death. Life cover can take care of the following:

  • Maintaining your family after your death by paying a monthly income;
  • Providing for the studies of your children;
  • Paying maintenance to your children in terms of a maintenance order.

Life cover will give you peace of mind to know that your loved ones and family are financially provided for in the event of your death. 

Disability Cover

If you were unable to work because of illness or injury, how would you pay for your expenses? With disability cover you can protect your biggest asset – your ability to earn an income.

Disability cover can take on two forms.  Depending on your situation, one or a combination of both of these types of cover may suit your needs best.

Lump sum-disability: This type of cover will pay a lump sum should you become disabled and can cover the following costs should you become disabled:

  • Extra medical expenses related to your disability;
  • Costs like purchasing a wheelchair, or making physical changes to your living space or vehicle to accommodate your disability;
  • Settling your debt; or
  • Providing a monthly income for a period of time.

Income Protection: This type of cover will pay a monthly income for a certain time should you become disabled.  This cover replaces your monthly salary allowing you to continue to keep up to date with your responsibilities as you did before your disability.

Disability cover protects your family’s financial security and gives you peace of mind that you and your family will be cared for should you not be able to earn an income due to prolonged illness, impairment or disability.

Critical Illness Cover

This type of cover will provide financial protection for you and your family in the event of you being diagnosed with a critical illness like cancer, a heart attack or a stroke. 

Critical illness cover can help offset any shortfall on your medical aid costs, or assist with a lump sum that you can use to pay for your lifestyle adjustments.

Guidance on what to look at when considering life insurance:

  • We always suggest using a financial planner or financial advisor to assist you in aligning your needs with your budget and the correct life insurance product.  These planners and advisors can navigate the insurance minefield on your behalf.
  • Make sure you read the terms and conditions of the cover carefully.  Understand what will be paid when, what the restrictions are, which waiting periods there might be, etc.
  • Make sure you understand the premium pattern on the policy and what you can afford in the future.  A premium might be lower in year 1 of the policy than another similar product, but the premium increases might mean that you cannot afford the policy in year 5, whilst the initially higher premium might have no increase linked to it.
  • Life insurance premiums are determined by a few factors, one of which is age.  If you are wondering if now is a good time to take out life insurance and provide for your family in case of your death, the answer is yes.  For every birthday you celebrate, your premium will increase.
  • When your financial planner or advisor, or the life insurance company asks you for your medical history, disclose everything.  Too many claims are turned down by life insurance companies because of non-disclosure at the start of the policy.  This can be devastating for yourself, or your loved ones in case of your death.

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