Yes, You Probably Need Life Insurance—and Here’s Why!
You have great dreams and hopes for your children. You dream of quality education, a beautiful home, and a family of your own. If you’re wondering whether it makes sense to buy Life Insurance, ask yourself these two questions: What would happen to those dreams if something were to happen to you? How would your family survive the loss of your income?
Life insurance is the most overlooked financial investment that families should make to protect their loved ones and their assets—but South Africans are dreadfully underinsured. Actuarial modelling shows that about 380 families lose a breadwinner every day in South Africa, and statistics show that over 40% of South Africans do not have a formal Life Insurance policy.
It’s easy to put off purchasing a policy—money is tight, and insurance can be confusing. But some cover is better than no cover. Here’s why you need life cover.
If you were to die tomorrow, who would assume your debt?
Death is unavoidable—and the least you can do for your family is secure their financial future. Whether it’s for replacing lost income, paying tuition or outstanding debts and loans, your Life Insurance policy will pay—hundreds of thousands of Rands, or even millions—at the exact time of need.
Your family needs assurance that the amount you have chosen will be there almost immediately. Even if it’s a small policy, Life Insurance can save the day for your surviving dependents.
Replace lost income
There are policies designed to protect against accidents, injuries, death, or when a disease throws us for a loop—but what if we lose our job?
Retrenchment is a reality as many anxiously wait to see if they are next. With businesses closing their doors at such a rapid pace, paired with SA’s rising unemployment figures, providers have filed the income cover gap.
Supplement your retirement goals
Since Life Insurance is an instrument that keeps you invested in the long term, you can ensure a regular income stream every month after you retire. Putting money in an annuity is like a pension plan; put in some money regularly and enjoy a steady income every month after retirement.
Over the years, Life Insurance has also evolved to provide options for building wealth through some policies tied to certain investment products that pay dividends based on their performance.
Build Cash Value
Term Life Insurance stays in place for a set period, but whole Life Insurance provides permanent coverage that ends if you cancel the policy.
Allowing you to build up cash value over time is an attractive prospect to many people, as cash value acts as an extra cushion for a financial emergency down the road.
Leave a healthy inheritance.
Like most parents, you want to know your children will be taken care of when you’re gone. You not only want them to get a quality education, but you want to leave extra for travel, marriage, and even venture capital.
If you don’t have any assets to pass on to your children, you can create an inheritance by buying a Life Insurance policy and naming your children as beneficiaries. That is a great way to set your kids up for a solid financial future and provide for any monetary needs that will arise.
Life Cover is more affordable than you think.
The rationale for Life Insurance is simple: It’s a way to protect family members financially should a provider unexpectedly die. A policy can help cover your bond, secure a quality education for your children, and safeguard your spouse from inheriting your debts. But with all these great benefits, many people assume the premiums are astronomical—especially today.
Life Insurance is not sexy. It’s not fun to talk about, and it’s not a process anyone enjoys. Most people avoid cover because of the cost—but life cover is often inexpensive. Term Life is less expensive than Whole Life, and the younger and healthier you are, the lower your premiums will be.
Insurance is a diverse industry. Some insurance providers are better at certain products than others, whereas others base premiums on age, job, health and lifestyle. A medical exam is often required to determine the best cover. Will it be Term Life Insurance or Whole Life Insurance? Below we take a look at the difference between both.
Whole Life or Term?
Recommended for standard Life Insurance needs, Term Insurance is a stripped-down model of Life Insurance. It offers cover at a fixed rate for a temporary period. If you pass away during the selected cover period, the insurance company pays your beneficiary a lump sum.
The annual premium for Term Insurance is always less than the whole life, lacking the investment component, but your premiums will rise once the term period expires.
Whole Life Insurance, on the other hand, offers lifelong cover – provided you pay your premiums. The investment characteristic means that premiums are higher than a Term Plan with the same face value. But you’ll receive a significant pay-out if you cancel the policy, and if you pass away, your beneficiaries will receive a substantial payment.
Tomorrow promises nothing to anyone, and Life Insurance gives you peace of mind knowing that if anything should happen to you, your Life Insurance will protect and provide financial relief for those who must weather the stormy seas without you.