Personal Life Insurance: Start Your New Year With Peace of Mind

For many South Africans, personal life insurance cover is seen as something to be sorted out at the end of a long list of priorities. But the truth is that the unpredictable could occur at any time.

Life insurance is also something many people don’t really want to think about. Inherent in the human condition is the presumption that we’ll live a long, healthy life – and of course, we sincerely hope that’s the case. However, accidents happen, dread disease is an unpredictable reality, and life expectancy statistics in South Africa don’t always present an encouraging picture.

There’s an old saying that we should “expect the best but plan for the worst” – and there’s a lot of wisdom in approaching your life financial planning with that in mind. By having the necessary safeguards in place, you’re equipped to make better decisions, enjoy your life with greater peace of mind, and know that your loved ones will be financially cared for should something occur.

What’s the Purpose of Personal Life Insurance?

From a purely technical perspective, life insurance is simply a contract between an individual and an insurance company, that provides for the payment of a sum of money in the event of the individual’s death. The payment is made to the designated beneficiaries chosen by the individual.

But the purpose of personal life insurance goes far deeper than just a monetary payout.

To begin with, the right kind of life insurance forms a foundation for smart financial planning – because your financial decisions also affect your loved ones, the estate you leave behind, and so much more.

Let’s take a moment to consider some of these implications:

Financial Protection for Your Loved Ones

Should you pass on, your living role as a contributor to your family’s financial well-being comes to an end. However, those financial commitments still remain:

• There is the immediate cost of a funeral, which can be considerable. (Separate funeral cover is highly recommended.)
• There are ongoing living expenses to consider, like groceries, clothing, payment of utility bills, and other necessities.
• Bond repayments, vehicle repayments, and personal loans or other debts will still need to be serviced.
• If you have children, there is the cost of current and future education to consider, too.

Most of all, there is now an income disparity if you’re no longer there to contribute. Without adequate means to replace that lost income, your family’s standard of living may dramatically decrease – along with the physical and psychological hardship this entails.

Leaving a (Good) Legacy

In addition to the immediate cost-of-living considerations, there are also longer-term financial implications should you pass away.

Perhaps most importantly, personal life insurance is a key component of a longer-term wealth building strategy. Think of it as a protective measure – these are funds you won’t (and can’t) lose on a business venture or as a result of temporary financial difficulties during various stages of your life. By having your bases covered in terms of life insurance, you have a safety net in place and can then lay the foundation for better financial lifestyle design. And, with the help of a knowledgeable financial advisor, you can also begin saving and investing with longer-term benefits in mind.

The goal, of course, is to create generational wealth: something that outlives you and benefits your children. Bear in mind, too, that the life insurance payout to your beneficiaries is taxable, and that’s why you should always look to a professional for the best advice on how to structure your personal life insurance policies to ensure adequate future funding for your loved ones.

Peace of Mind

By having a good life insurance and a sound financial plan in place, you’re gifting your family with something priceless – peace of mind. More than ever, South African families are experiencing financial stress, which brings its own set of worries and concerns about the future.

Personal life insurance is a necessary investment in the future financial stability of your loved ones. And the best time to start – or upgrade – is right now.

Key Components of Good Personal Life Insurance

Ideally, you want your life insurance to be optimised – but it also needs to be practical and sustainable.

There are 4 key components to take into account when considering life insurance options:

• The type of policy you enter into. Ideally, this should be determined according to your own unique circumstances and requirements – and a skilled financial advisor can save you an enormous amount of time and money here.
• Your monthly premiums. Naturally, we’d all like the best coverage for the lowest possible premium, but remember that when it comes to life cover, bargain basement pricing is not always the wisest route to take. On the other hand, you don’t want to be ripped off, either! Your financial advisor will help you ensure the best package to suit your needs.
• The coverage amount at payout. Personal life insurance isn’t a “one and done”, simply because you need to factor in things like cost-of-living escalation, diminishing returns relative to inflation, and changing legislation that might affect what your beneficiaries ultimately receive. This means your cover should also increase as your lifestyle evolves. You can either try to figure out all the moving parts yourself (not recommended!), or simply have a Pogir professional assist you every step of the way.
• Policy stipulations and additional coverage. There are almost always clauses in your life insurance policy that you should be particularly aware of – because they can reduce or even nullify a claim if not adhered to. You might also want additional coverage for specific circumstances.

What if You’re Ill or Can’t Work?

Unforeseen events could also occur while you’re still alive. Heaven forbid, you may incur a disability or be diagnosed with a debilitating illness. In situations like these, you might be disadvantaged to the point where you can no longer bring in an income.

Disability insurance serves to cover a portion of your existing income if you’re no longer able to work – which means that you will still be able to contribute to your family’s financial stability and well-being.

In the same way, critical illness insurance – commonly known as dread disease cover – provides for a lump sum payout within the terms of your policy if you’re diagnosed with a critical illness. This is particularly important, because in addition to a source of income, this may also help cover the cost of medical procedures and the recovery process.

Illnesses like cancer, stroke, or heart disease can be utterly debilitating, and it makes sense to have a policy in place to cover yourself should this occur.

On a slightly less drastic note, you could also take out income protection cover – so that if you become unemployed or lose your means of earning a living, you’re assured of a temporary means of income.

Forward Thinking, Forward Planning: The Pogir Difference

At The Pogir Group, we’re committed to ensuring that our clients receive the very best financial advice and market-leading service. We’ve built our reputation on integrity and experience, and our goal is to grow with you, every step of the way.

In addition to personal life insurance, we also provide short-term insurance, personal and corporate healthcare solutions, employee benefit programs, life financial planning, and expert wealth management.

So, if you’d like to start your new year with peace of mind, let us help you with the best personal life insurance options – or upgrades – to suit your lifestyle.

To find out more, contact us today to arrange a no-obligation consultation.

Pogir.

Smart, with heart.