You have probably seen the life insurance TV commercials in which small children, all wide-eyed and adorable, ask questions like, “Hey, mom, what will happen to us when you are gone?” Most parents worry about this, but for some good reasons, they do not really want to think about it. However, many consumers believe that someone has to die for life cover to be of use. We hate to say this, but you have to unlearn that belief, because it is not completely true! As soon as somebody depends on you financially, you need life cover.
It is understood that you could never be replaced, but with life cover, your loved ones would not be burdened with the financial pressures that would come with your loss of life, income or a disability. Below I briefly discuss the type of covers that lie beneath the live cover umbrella:
Life cover: protect your loved ones
Life cover: protect your loved ones
On your death, this cover protects your assets and your family. Those that are financially dependent on you can use the payout to replace your income, to pay estate duty and to settle any outstanding debts you may have. For example, if your total liabilities are R1, 5 million, it is advisable to seek life cover that exceeds this amount so your beneficiaries are not left with a huge debt after you are gone.
Income protection cover: protect your livelihood
If you are unable to perform your employment duties or are retrenched, your income protection cover will pay you usually up to 75% of your net of tax income every month. If you are permanently unable to work, the benefit may cover 100% of your net of tax income. By replacing your lost income, you can continue to pay for your monthly expenses such as groceries and your children’s education.
Disability cover: protect your standard of living
If you are permanently disabled, this cover will help you pay for lifestyle adjustments and long-term medical care. It protects both your family and your finances. Payouts are based on objective medical criteria and take into account your occupation.
Severe illness cover: protect your health
If you are diagnosed with a severe or critical illness, your medical aid might not cover all your costs. This cover will enable you to pay for some high-costs treatments, rehabilitation and lifestyle care.
How can you get the appropriate cover?
It is very simple. You need to perform a financial needs analysis with one of our wealth managers. This analysis will consider all your assets, expenses and liabilities so we can recommend a type of cover that suits your personal wishes. We can also review your existing life cover. As you encounter life changes – you may need to reconsider whether your life cover is still appropriate to your changing needs.
Owen Nkomo
Chief Executive Officer
Owen is the founder of Inkunzi Wealth Group and has over 14 years of industry experience. Prior to founding Inkunzi Wealth Group he held various leadership roles at Deutsche Bank, JPMorgan Chase and Citi. He has an Honours degree in Investment Management.