making-sure-you-have-the-right-life-cover Making Sure You Have the Right Life Cover

“Life cover is a product that helps to financially protect you and your loved ones against life’s risks such as illness, disability and death. It can’t safeguard you from these risks, but it can ensure that you and your dependants are taken care of financially. It can give you and your family peace of mind to make the most out of life,” says Petrie Marx, Product Actuary at Sanlam Individual Life.

While getting life cover sounds like a straightforward thing to do, it’s important to get the right kind of cover for you and your family, as there’s a chance that you could be underinsured, particularly when it comes to expenses, debts and the money needed for funeral costs. To make sure you get the right cover for your needs, you should ask your financial planner the following seven questions.

1. When must I review my life cover?

You should review your life cover when your circumstances change. “The moment you start working, it becomes important to protect your income and your future. It’s important to take out enough cover to settle debts, and to review it again when you have children,” says Marx.

2. How much insurance do I need?

The amount of cover you need depends on your own circumstances, and that’s why it’s important to get individual, tailored advice and not get the same cover that your neighbour has. “Industry studies show that many of us are underinsured,” says Marx. “You need to look at your income needs, and what your family would need if you were to pass on or become disabled. Even better – ensure that your life cover settles your bond payments so that they’re no longer a financial burden for your family should you no longer be able to pay the instalments.”

3. Downgrading cover

If your children have left the nest or if you’ve paid off your bond, it’s important to find out if you still need the level of cover you had when you first started out. Reducing it could be a way to save money if you need to, but there’s also no harm in keeping the cover in place, just as it is. “If you want to leave a legacy, why not keep that risk cover in place for the people you leave behind?” suggests Marx.

4. Family needs

Marx says it’s vital to ask questions relating to you and your own family’s history. “For example, if you have cancer and heart conditions in your family, you need to ask your financial planner if they have products that can help you to protect yourself against such risks.”

5. Change in circumstances

Life can throw unexpected curveballs at you, so it’s important to be prepared or flexible enough to adapt. If you become retrenched or suffer any other financial setbacks, you need to know what your obligations to the insurer will be. “Ask about the affordability of cover into the future, understand how costs will change or if they will change – and by how much – and understand what your obligations are in terms of keeping up with payments,” advises Marx.

6. Topical issues

Once in a while there is an event that comes along that can shake the economy and also have a direct impact on your health. The COVID-19 pandemic is such an event. How will your insurance provider react to such an event? “Ask about the topical issues of the day, like COVID-19. Find out what is covered today to give you peace of mind, and what cover is available should there be any future pandemics.”

7. Claim stats

It’s not about putting your financial planner on the spot, but about choosing the right insurance provider for your needs. Find out if the insurer you intend to take out cover with is a good and prompt claims payer when it comes to legitimate claims.

Empower yourself

While a financial planner may be more informed about the insurance products on offer, there’s no reason you can’t empower yourself by doing your own research. “Take responsibility for your own understanding of the need for life cover. Build a good relationship with your financial planner. Budget properly and ensure that you can afford the cover,” advises Marx.

Please consult with a financial planner before you take any action regarding your policies. Sanlam is a Licensed Financial Services Provider.