Determine Your Needs

Why do I need Life Insurance?

You probably need life insurance if you:

  • Have dependents (people who rely on you for financial support)
  • Are soon to be married, or are in a committed relationship with shared financial obligations
  • Have debts, such as a mortgage, car repayment, personal loans, and not enough assets to cover them
  • Own a business
  • Don’t have enough savings to cover burial and final expenses
  • Want to leave a financial legacy to your loved ones

You most likely don’t need life insurance if you:

  • Are single
  • Have no dependants (people who rely on you for financial support)
  • Have no debt or
  • Have enough wealth or savings to cover your debt, dependants future lives etc.

Life insurance mitigates the risk around your death. It gives you peace of mind knowing that on your passing your financial affairs are in order. Life insurance is one of the most selfless things you’ll ever buy. It’s about making sure that the people you love the most are well looked after should the worst happen.

A bit on the history of life insurance here.

 

What cover do I need and how much is enough?

We’ve created this calculator for you to do just that. Adjust the assumptions to best fit your situation.

Or have a read of out article: “How much life cover do you need”

 

Things to be aware of

A note on covering debt

Nowadays, almost all lenders will require you to have some sort of life insurance when you take out a loan of a significant amount.

If you are looking to cover a loan  – double check that you are not doubling up on life insurance. Also be aware that you can cede a portion of the policy to the financial institution. This is to cover the loaned amount in the event that you are unable to pay due to death and sometimes lack of income.

 

The cost of education

A child will spend 12 years at school.

Say the cost of a matric year as R50 000 per annum when your child begins school.

What will matric actually cost when your child gets there in 12 years?

Simple inflation indicates that at +/- 6% your child’s matric will in fact cost around R100 000.

If you are interested in some more calculations, below is a great Life Insurance Needs calculator.

 

Funeral costs

It depends largely on what you and your family want but funeral costs can get rather expensive. If you have an idea of what you want it’s easy enough to estimate this at today’s costs and plan for inflation.

More about funeral costs here.

 

Leaving a legacy

Another way to look at Life Insurance is “leaving a legacy”.

Many of us plan to retire and not be a financial burden on our children. Any parent would also want to leave a legacy behind.

While the typical tool to do this would be an investment of sorts, a lump sum pay out at your death is an immediate and interesting mechanism to address this.

 

Applying for Life Insurance

Information you typically need to provide:

  • Your contact information and SA ID number
  • Your financial information, including salary and household income
  • Info about your current work and lifestyle
  • Your recent health history information
  • Basic health information of immediate family
  • Names of your beneficiaries, ID numbers, dates of birth and if possible phone numbers and addresses

 

Underwriting is the process of assessing risk. There are three different processes of underwriting for differing life insurance products :

  • Fully underwritten, with medical examination.
  • Underwritten based on questions (no medical)
  • Non underwritten (no medical questions)

The products which these apply to are further explained here:

Compare products

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Interesting articles on life insurance

  • Think you might need life insurance? Here are some questions to ask yourself. - If I were to die how would my dependants survive without my income? What would happen to bond or rent payments, vehicle installments or school fees? If you don’t easily know the answer to any of these questions then you most probably need life insurance. Maybe you don’t have dependents but still have bills that Read More
  • Things I wish I’d known before buying a house - Buying a house isn’t something you do every day, so when the time comes, it helps to have some inside information. An Offer to Purchase (OTP) is a serious thing This is a legally-binding document that contains a lot of jargon. Make sure you understand what you’re signing up for. Unfortunately tenants, property agents and Read More
  • A Few Questions to Help You Plan For Your Pregnancy - Although this list of questions may seem daunting at first, if you give yourself enough time to work through these questions, you should be sorted by the time your baby is born. 1 )  Admin and finance-related (pre-baby) Medical aid Do you have medical aid? What pregnancy-related benefits do they offer on your chosen option? Read More
  • Baby on the Way? How to Beat Budget Blues - Ask someone whose got kids for advice, and most likely you’ll hear: “Your life will never be the same again.” But that statement is almost always quickly followed by: “But it’s so worth it!” If you’re having your first child and up until now, haven’t had to provide for anyone but yourself, there will be Read More
  • What is an accelerated funeral benefit? - It may come as a surprise, but a life insurance claim can often take up to a few months to pay out. So what about the funeral costs? Well, you could take a funeral plan, or if offered by the insurer you could get an accelerated funeral benefit as an add-on to your life policy. The accelerated Read More
  • Buying an underwritten policy? Answer all questions honestly and accurately.  - When buying a life insurance policy it is very important to answer all questions honestly and accurately. Why? An underwritten policy is priced according to your individual risk - hence all the questions. Not answering honestly and accurately could lead to something insurers call 'non-disclosure', and that could mean a policy doesn't pay out when it Read More
  • Determine whether or not you need life insurance - If I were to die how would my dependants survive without my income? What would happen to bond or rent payments, vehicle installments or school fees? If you don’t easily know the answer to any of these questions then you most probably need life insurance. Maybe you don’t have dependents but still have bills that Read More
  • A Funeral Policy vs Life Insurance - A funeral policy is designed to pay out a quick amount of cash to cover the costs associated with a funeral. Life cover offers much higher payouts but doesn’t necessarily have the promise to pay-out as quickly. So how do you get the best of both worlds? With a Different Life policy, you can ad Read More
  • Why does my premium increase when my cover doesn’t.  - Many insurance policies have an increasing premium even though the cover amount doesn't change. Life insurance also gets more expensive as you get older; why would this be the case? Each year we get older and unfortunately for all of us that means we become more likely to die, even if only a little bit. Read More
  • What is a waiting period and why should you care?  - A waiting period is an amount of time where you pay a premium but don't yet have full cover. This is usually done to prevent people from buying a life insurance product when they suspect they might already be ill. Another way to deal with this risk is for the insurer to assess it through Read More

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