Help your family thrive even if you pass away

If you’re a breadwinner with dependants, it’s a good idea to regularly review and refresh your financial plans.

To protect your family in case they ever need to face the future without you, make taking out life insurance and funeral insurance a top priority. This will ensure that should and when you pass away, your family will get the support they need to cover future costs. 

But what if your budget is already very stretched by everyday expenses? 

Mabuti Motau, KZN Provincial General Manager at Old Mutual, urges primary income earners to remember that life insurance and funeral insurance are part of life’s necessities. 

“They are important tools for preparing for the future,” he says. “By delaying and postponing, you could be leaving your family at risk at an already sad and stressful time. Investing in both life and funeral insurance is the wise and responsible thing to do, plus it will give you and your family peace of mind about the future.”

The reason why life insurance is such a valuable gift to leave for your family is that it enables them to maintain their lifestyle after you pass away. 

Motau explains: “Having life insurance could, for example, enable your family to continue living in the family home that is full of the happy memories you made together. Alternatively, the life insurance payout can be used to cover living expenses, finance your children’s education or pay off estate duty costs and other debts.”

Calculating how much is enough

An experienced financial adviser will be able to do a thorough needs analysis with you. The cost of life insurance (the premiums you pay) will differ from person to person. To help you determine the amount of cover needed to take care of your family’s needs after you’re gone, consider factors such as your income, monthly expenses, outstanding debts, and your family’s future needs and like education costs.

“But remember you can start small and adjust your cover and your premiums as your income grows,” says Motau. 

“If affordability is a concern, consider reviewing your budget to identify areas where you might be able to free up some funds for essential protection like life insurance. A financial adviser can help you explore suitable and affordable options.” 

By doing this, you may be able to find life insurance that suits your pocket and still gives you the peace of mind that your family will be taken care of.

Funeral insurance is not life insurance

It’s important to understand the difference between life insurance and funeral insurance (also called life cover and funeral cover).

Although both life insurance and funeral insurance pay out when a person dies, the two types of cover serve different purposes.  

Funeral insurance is intended to provide quick financial support to help families meet immediate expenses associated with a funeral. Life insurance is designed to meet long term needs and goals. The minimum cover amount for Old Mutual’s Funeral Insurance is R5 000, and for Life Insurance, it is R100 000.

“It’s ideal to have both funeral insurance for immediate expenses, and life insurance for your family’s future stability. But if you can’t afford both right away, start with one of them and build towards having both as your finances allow,” says Witness Ntshikilana, Provincial General Manager, Western Cape. 

Finding the right financial guidance

In the case of life insurance, it’s best to reach out to a qualified financial adviser to help you figure out how much cover you need and how much you can afford to pay in premiums.

It’s advisable to select an insurer that has a reputation for being trustworthy, dependable and reliable. The insurer should also offer a personalised, customised service and have a track record of paying out. 

Last year Old Mutual paid out R6.2 billion in underwritten death claims and approved 98% of these claims that they received. 

The role of medical tests when taking out life insurance

When taking out Life insurance with Old Mutual, medical testing is optional up to certain cover limits, beyond which it becomes a requirement.

Customers will be asked to answer questions about their health and lifestyle and may also opt to or be required to undergo medical tests.

This allows the insurer to gather information that helps 

determine your risk profile and therefore charge each customer a fair and accurate premium. 

When life cover starts

With Old Mutual you could be covered for up to 30 days before your first premium is due, but it is always best to check your policy details to confirm when your cover starts.

More good news is that all Life insurance payouts are tax-free.

You can also customise your life cover by adding disability or severe illness cover giving you comprehensive and flexible protection. 

If you happen to go through a tough financial time and have problems paying your premiums, you can adjust your cover by reducing the cover amount or removing optional add-ons. 

To speak to a financial adviser, call 0860 60 60 60.