Top 7 Life Insurance Cover Myths

Life insurance cover is not the simplest of products. Even term life policies tend to have numerous elements that need to be carefully considered in order to determine the proper insurance type and amount of coverage. Luckily, the technical aspects of life insurance cover are less difficult. Here are a few misconceptions around life insurance.

1. I’m Single, I don’t Have Dependents. Therefore, I Don’t Need Life Insurance Cover

If you drive a car chances are you have car insurance and if you own a home you probably have household insurance. You probably have car insurance with a reputable company. So why should your life be any less valuable? Even single people with no dependents should at least have enough life insurance to cover the costs of medical bills; funeral bills and any personal debts that may arise in the event of an unforeseen circumstance. If you are uninsured when you die you may leave your family with unpaid expenses to deal with.

2. My Term Life Insurance Through My Employer is Good Enough

Do you get car insurance from your employer? Or did you choose your own? Depending on your personal circumstances, life insurance provided by your employer may or may not be sufficient. However, if you have a spouse or others who are dependent on you, additional coverage could be necessary in order to cover expenses in the event of your death.

3. The Cost of Premiums Are Tax Deductible

Unfortunately they’re not. The cost of personal life insurance isn’t tax deductible unless the policy holder is self-employed and uses the cover as asset protection.

4. I Should Buy Term Insurance Cover and Invest the Difference

There are differences between term and permanent life insurance. The cost of term live coverage can be higher later on. So if you know for certain that you need cover in the event of your death you ought to consider permanent coverage. In the long run, the total outlay for a more costly policy could really be less than ongoing premiums that last for years with a more cost-effective term policy.

5. Only the Breadwinner in My Family Needs to Be Covered

This is a complete myth. The cost of replacing services when someone dies can be higher than you might think. Insuring against the loss of a homemaker makes more sense than you think – particularly when it comes to day-to-day costs.

6. I’d Be Better off Investing My Money Instead of Buying Insurance

You always need life coverage of some type. Once you amass literally millions of Rands worth of liquid assets, then you can consider discounting life insurance. But if you depend solely on your reserves, you’re taking a huge risk, especially earlier on in life if you have dependents. If you should die or become incapacitated without providing security for your loved one, there may not be means of endowment once your current assets are depleted.

7. Buying Life Insurance is Risky

This is fortunately untrue in South Africa. The insurance industry it regulated and the liquidity of the various life insurance companies is carefully monitored. The large life offices are rated according to their standing. Those assured have recourse to an Ombudsman and to the law if there is a dispute.

All info was correct at time of publishing