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Do I really need Life Cover Insurance?

Not everyone needs life cover. When you are a young, married breadwinner with a brood of small people to take care of, then life cover is a non- negotiable. If you feel you can’t afford it, cut the entertainment bill, start buying no-name brands and reel in your fast food habit. Very few people would ‘rest in peace’ knowing that if their income was lost, their family would lose their home, car and financial stability. Raising children is hard enough for a married couple, but to become a surviving spouse with debt and an insufficient salary is just horrible.

The purpose of life insurance is to protect your family from the premature loss of your working life’s income and free them from financial worry after the trauma of your death. The surprising thing is that it is remarkably inexpensive when you consider that your family could receive R4 Million rand for a monthly fee that would be less than your DSTV subscription.

Later in life, if your savings and investment plans have been properly worked out and adhered to, you should have a steadily increasing net worth. Eventually, your investments should be large enough to ensure a comfortable life for you and your spouse in the absence of that monthly salary cheque. This would mean that you no longer require life cover.

There’s something about life insurance that just freaks some people out. Perhaps it’s because it forces us to accept the fact that, in the absence of a freely available alchemist’s potion that allows us to live for ever, we will all eventually get past our sell by dates.

If you have life cover as part of your employment package, check it carefully. Company remuneration benefits often have a number of products rolled onto one, the life cover portion may not be sufficient. Also, if you leave that company, the coverage will end. So it makes sense to explore a life insurance policy that will stay with you no matter where you work.

A good rule of thumb is that you might need 10 to 20 times your annual salary, and group benefits may not cover this.

The cost of simple level term insurance has come down substantially over the years; many people are surprised at how cheap it can be. It’s definitely worth getting a quote to dispel any per-conceived ideas you may have.

People don’t realize is even if you’re a stay-at-home mom or dad, you contribute to your family with the valuable services that you provide like cooking, cleaning and driving the kids around town. It all adds up! With more than one life insurance policy in place, your family would be protected if something devastating were to happen.”

The main reason you should get life insurance earlier that later is because if you wait, and you develop a serious medical problem, you may not be able to get the coverage you want. Also the rate for new life insurance is based on your age; the longer you wait, the higher the premiums.

While most of us need life cover we don’t need it forever. You should aim to become wealthy enough to be self-insured long before you retire. If you keep your life insurance and investments separate, your family will receive both in the event of your death. Pure life cover is very affordable and you should not be without it while building your financial future.

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e: jackie@theartofwealth.co.za
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