If you’re feeling wary about taking out life insurance, here are some good reasons to overcome your doubts and take up one of the most valuable investments for yourself and your family. Before you read on, first consider what’s valuable about your life.

What are the things you want to protect? How can you calculate your life’s current value? And how do you preserve a future value? And of course, what can you do to make sure your policies will provide real strategic benefit in the future? Life insurance isn’t just for the wealthy. No matter your income level, life insurance is patently more affordable than you think.

Size of your policy
Many experts recommend having life insurance that’s equal to 8 to 10 times your annual income. If you have a policy (or policies) of that size, the people who depend on your income will be well covered with regard to living expenses or any other major cost such as bond repayments or children’s university fees. Your policy can therefore cover: income replacement for years of lost salary; bond repayments; college fees; payment of debts, such as car loans, credit cards, and any student loans; helping with any other obligations, such as caring for elderly parents.

Funeral expenses are covered
Having to pay for a funeral can be a substantial financial burden. If you have a life insurance policy, your beneficiaries can use the money to pay for your burial expenses without having to dip into their own savings or use credit. Some insurers offer final expense policies. These policies have low coverage amounts and offer relatively inexpensive monthly premiums.

Tax relief
If you have a life insurance policy and die while your coverage is in effect, your beneficiaries will receive the lump sum death benefit specified on your policy. Life insurance pay-outs are not considered for tax purposes, and your beneficiaries don’t have to report the money when they file their tax returns.

Supplementing your retirement funding
If you purchase a whole, universal, or variable insurance policy, it can accumulate cash value in addition to providing death benefits. As the cash value builds up over time, you can use it to cover expenses, such as buying a car or making a down payment on a home. But it’s chief benefit is that if you let it build in your policy, it can eventually become a valuable supplement to your pension and retirement funding in later years.

Cover for chronic and terminal Illness
Many life insurance companies offer endorsements or riders, which offer certain enhancements to your coverage. An accelerated benefits rider allows you to access some or all of your death benefit under certain circumstances. For instance, if you are diagnosed with a terminal illness and expected to live less than 12 months, you can use your death benefit to pay for your care or any other expenses.
Term Life insurance and Whole Life insurance

What are the benefits of Term life insurance?
Chiefly, your premiums will be much lower. It only lasts for a specified time, usually 20 years. If you die during the specified time, your beneficiaries will receive the sum insured. If you outlive the time specified, you walk away (you get no payout) – or if you like, you can take out further insurance. If you no longer need it or can’t afford it, you can walk away without losing anything more than the premiums already paid, but your family would have been protected during this time.

What are the benefits of Whole life insurance?
This permanent life insurance is paid all your life. It contains an important savings element known as cash value, which means you can take out or borrow against the policy. It also provides certain tax-advantaged estate planning benefits.

Cost-effective ways to organise your life insurance

  • Buy when you’re younger. Generally, the most cost-effective way to buy life insurance is to do it when you are young and healthy. Life insurance companies generally give younger customers lower rates for the following reasons: younger people tend to have a longer life expectancy; they are less likely to have been diagnosed with a serious disease; they are likely to pay premiums over a longer number of years.
  • Riders. Many policies have valuable ‘riders’ or contractual provisions that provide benefits before death.
  • Accelerated death benefit. This popular rider can help pay for needed care of a diagnosed chronic or terminal illness. While this can be very useful in a time of need, you should also know that any funds that are paid out will lower the final death benefit paid to your beneficiaries.
  • Disability waiver of premium. This valuable rider allows you to stop paying premiums should you become disabled during the time you are paying your policy, while still keeping your coverage.
  • Purchasing a joint policy for you and your spouse can garner you considerable savings.
  • Getting insurance at group rates through your employer. Group insurance lowers the premium costs.
  • Purchasing a whole life policy that accumulates cash value, which may then be used to reduce monthly premium costs at a later stage.

Check your policies, check your life

VeriFi is an online tool that provides you with an immediate and up-to-date overview of all your life insurance and investment policies by sourcing information from all the major life insurance companies – and presenting the information in a comprehensive report.

With VeriFi you are able, for no charge, to access information on all your life and investment policies at a glance. You are able to check the types of policies you have, the names of the insurance companies providing the cover, the nature and extent of the insurance cover provided – and other vitally important information such as the details on your policies being correct.

To find out more, please visit: www.verifi.co.za