Facts of Life Insurance

Are you unsure about life insurance? Here is a guide to the facts of life insurance.

Fiction: I have no dependants so I don’t need life insurance

Fact of Life Insurance: If both you and your spouse earn salaries then your whole life is structured to a certain level of income. It is unlikely that you would be able to sustain this lifestyle if your partner were to die. Yet you would still need to make your home loan repayments, pay off the vehicles, meet all your household expenses and pay off debt. A solid whole life insurance policy would help you to cope with a death in the family. It will help you to maintain your standard of living.

Fiction: It’s better to invest my money than to buy life insurance

Facts of Life Insurance
Fact of Life Insurance: The purpose of investing money is to grow your wealth for the long term. On the other hand, life insurance is to protect you against unforeseen events such as loss of earnings, disability or death.

If you relied on your investments to cover unforeseen events it could happen that you would liquidate them when the market is down and your returns are slim. You would lose on the deal, in other words.  It could also be that your investment was insufficient to sustain your family for a decent length of time, if a life-changing event happened before retirement.

More Facts of Life Insurance

Fiction: My life insurance at work is sufficient life cover

Fact of Life Insurance: Although many companies buy life insurance for their employees this usually amounts to only about two years’ salary. It is unlikely that this would be enough to provide for your family’s needs way into the future if you died before retirement. Ensure that your life insurance at work is sufficient.

Fiction: Only the breadwinner needs to have life cover

If your partner stays at home and does not earn and income this does not mean that he or she does not need life insurance. If your partner were to die then all the support they gave in the way of housework and general home administration would be lost and you would have to replace this somehow, probably by paying wages or for post-school day care.

And More Facts of Life Insurance

Fiction: Life insurance is completely separate from lifestyle

Fact of Life Insurance: Actually your lifestyle has a major impact on your life insurance. If you have a high-risk lifestyle, in insurance terms, then your premiums will be higher. This is an inescapable fact. In addition to your lifestyle, premiums are influenced by your age, sex, education, income level and, most important of all, your lifestyle. If you are a hard-drinking hang-glider your premiums will be much higher than for a desk-bound person of the same age, sex, education and income.

Fiction: With life insurance you just buy a policy and forget about it 

Facts of Life Insurance:  A life policy that was perfect for your needs 10 years ago is unlikely to be suitable for your needs right now. You need to continually revisit your policy to make sure that it accords with the realities of your commitments and responsibilities. Discuss possible changes with your financial advisor so that your life insurance dovetails perfectly with your life.


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All info was correct at time of publishing