A life insurance policy is an agreement between you and an insurance company
In exchange for your premium payments, your insurance company will pay you or your beneficiaries an agreed amount if you become ill or injured, or if you pass away. Life insurance benefits include cover for death, disability, severe illness, or loss of income.
Life insurance cover ensures your loved ones are taken care of if you become ill, injured or pass away
Making sure you have life insurance cover is an investment in your family’s wellbeing. It will help you and your family meet your financial obligations, so you can maintain a similar lifestyle if something were to happen to you.
Depending on the type of cover you buy, your life insurance benefits will pay out a lump-sum or a monthly amount. Most life cover will pay out a lump-sum on your death to help cover the cost of your funeral, financially assist your dependents that rely on your income today, and settle debts, such as a home loan. Disability and income protection benefits will pay either a lump-sum or a monthly amount if you become disabled. Severe illness benefits usually pay a lump-sum to help you pay for extra costs that you may face if you become severely ill or injured.
If you earn an income, life insurance is essential
A lot of people believe that the young don’t need life insurance. But the truth is, anyone who is earning an income needs to consider life insurance. Even if you are young and single, you may have expenses that need to be covered if anything were to happen to you. If you’ve recently bought a small flat, as an example, you might need life insurance to pay off your bond if you were to become disabled or pass away.
Similarly, a young couple may need to take out life insurance policies to provide for each other, because they rely on both salaries to pay for their monthly expenses. Plus, life insurance typically becomes more expensive as you get older and are more likely to be sicker. That’s why it’s a good idea to take out cover now, when you’re young and healthy and qualify for a lower premium.
Get financial advice to help you know what cover you need, and how much
Insurance products can be pretty complicated. Making the wrong decision can have serious consequences for you and your family, so it’s worthwhile to shop around for the best advice. Fortunately, many well-qualified financial advisers can answer your questions, provide clear explanations, and help you understand what you’re buying. Financial advisers must meet strict regulatory requirements and be properly licensed with the Financial Sector Conduct Authority (FSCA) and product providers.
You have the right to ask your adviser for their credentials and ask whether they are independent or work for a specific product provider.
If you are dissatisfied with the advice you have received, you have the right to file a complaint with the Office of the Ombud for Financial Services Providers (FAIS Ombud). For more information, visit www.faisombud.co.za