How Much Life Insurance Do You Need?
September 22, 2013
There are different approaches to the issue of how much life insurance you need to have. It sounds great to hear that if you pay out a couple of hundred rand a month you will get life insurance up to one million rand. But is it really necessary?
Here is a helpful guide to the five levels of life insurance:
How Much Life Insurance – Whole Life
With this kind of life insurance you are insuring your life until its end. Real whole life insurance does not end when you are a specified age. It sees you to the end. This portion of your life insurance policy should cover your real debts including credit card debt, your home, any personal loans and what you owe to various businesses. Also included in this amount should be an amount you reckon is required to look after your dependents. That is, until they can care for themselves.
How Much Life Insurance – Term Life
Term life is the same as whole life insurance except that it expires at a certain time of your life, for example when you are 75.
How Much Life Insurance – Disability, Dread Disease, Serious Illness, Gap Cover
These insurance products are linked to whole life or term life insurance. They ensure that in the event you become unproductive through illness or disability that you will be compensated in some measure by an insurance payout. Dread disease insurance and gap cover insurance are becoming increasingly important as medical aid co-payments increase. If you do not have this kind of cover you could become very ill or disabled. Or you might face large hospital bills and other medical expenses.
How Much Life Insurance – Education Cover
There are several insurance companies, notably Discovery Life, that make provision for your children’s education until they leave a tertiary institution. Education insurance is extremely affordable. So you should definitely consider taking out an education policy of this kind if you have children. These days one needs tertiary education of some kind in order to find employment and make a living. Definitely take that into account in your insurance planning.
How Much Life Insurance – Retirement Plans
Some life insurance plans include a retirement plan portion, such as an annuity. This is a good way to enforce saving for your old age. State pensions are inadequate to support useful life, let alone retaining a decent standard of living. It might be worthwhile to reduce your whole life or term life cover in order to introduce a retirement or savings element into the mix.
NB: When drawing up a life insurance plan and trying to establish how much life insurance you need, it is best to involve at least three financial advisors. This is because certain advisors push the products of various insurance companies. You will be able to draw up an accurate picture of what is available by tapping the expertise of a variety of insurance brokers.
Next step: Complete and submit the form on this page to get a life insurance quote now!
All info was correct at time of publishing