Preserve your wealth even when you are not around- Importance of having a Life Cover in Place
According to a recent study conducted by FSCA, it is estimated that only one in ten adults in South Africa have a life assurance policy, which means that over 90% of South Africans do not have life cover. This is partly due to a lack of knowledge and partly to the assumption that life cover is expensive.
Defining Life Cover
Life cover is designed to cover the ongoing costs of life itself. It is there to preserve and sometimes even improve the lives of your loved ones, once you are no longer alive. Life cover or life insurance will pay your dependents a pre-specified lump sum in the event of your death. This benefit is there to ensure that your loved ones are looked after and provided for, even if you are no longer alive and there to support them financially. Life cover allows an individual to pay a monthly premium, in return an amount is paid out in the event of the persons death. Life cover is underwritten, which means that when you apply, an analysis will be gathered regarding information about your health and lifestyle through questionnaires and medical examinations. The less health complications you have, the lower your premium will be.
Purpose of Life Cover
Along with providing financial security to your family, a Life policy can also support you when you are not capable of earning a regular income. Your financial provision can also support your family with future occasions such as paying off University fees or a down payment on a house. A life policy fundamentally supports friends and family through significant events and can also ease the pressure on immediate costs such as organising a funeral or other memorial activities. Ultimately, it ensures that you can continue to grow the legacy you’ve always dreamt of building.
Your Life Cover Options
- Whole life cover: It is called whole life cover because this type of life insurance covers you for your entire life. Regardless of if you live to 65 or 105, your cover will remain active and when you are no longer here your beneficiaries will receive a lump sum pay-out. The older you grow, so will your premiums be most likely to increase because your risk increases. However, the amount you are insured for can also increase so your loved ones will receive a pay-out aligned with inflation. Some whole life insurance policies have an additional investment benefit, where the amount the insured person pays each month is invested and paid out once their beneficiaries claim on the policy.
- Term life insurance: Covers you for a set amount of time at a fixed monthly premium. It is usually the more affordable option but not necessarily the better one. Let’s say you have a term life insurance policy that remains active until you are 65 years old. If you surpass this age, your policy is no longer active, and you will need to take out another one in order to be covered. It also means that you will have paid all those premiums into your policy and received nothing back, which is not a good financial move. Because your premiums do not increase, your insured amount also does not increase, so your pay-out might not be sufficient for your loved ones due to inflation. Let’s say you are covered for R1 million now. If you pass away in 20 years’ time and your policy is still active, that R1 million is not going to go nearly as far as it might have when you first took out the policy. Life cover is meant to help those left behind maintain their lifestyles or pay off debt to live more comfortably when the insured person passes away. With term life insurance, this might not always be possible.
Benefits of having Life Cover
- Life insurance pay-outs can help provide financial security for loved ones
- It can help reduce the disruption of losing a parent or partner
- It can help compensate for a loss of earnings for those you leave behind
- It can be put towards unpaid debts, such as a mortgage, that fall to loved ones
- Some kinds of policies are designed to contribute toward funeral costs
- Some add-ons like critical illness cover can cover medical treatments that your medical aid may not cover
- Most of all, it can give you peace of mind should you not be able to work due to an illness, injury or disability
Get Life Cover with Morebo
Deciding on the right life policy can be challenging, which is why receiving help from experienced and qualified financial advisors can simplify the whole process. Get Life cover so your family can be taken care of if the worst happens, and you can’t provide for them no more. To find out more about the various types of life cover policies available, contact Morebo to have a tailor-made life policy solution that best suits your lifestyle.