Life insurance is an excellent way to keep your loved ones financially secure should you pass away. Deciding how much life cover to get can be difficult, but this decision depends on two main factors: how many people rely on you for financial support, and how much you want to be paid out to your beneficiaries (the person or entity that you choose to receive the payout in the event of your death).
At a minimum, the life cover you take out should be enough to cover all your outstanding debts, and should also ensure that your family won’t have to worry about unpaid bills or the threat of losing property or other assets. The cash sum paid out from a life insurance policy can also be used to pay for funeral expenses, estate fees and other related costs.
So, given this, how should you choose your life insurance?
Here are three factors you should consider:
1. Loss of primary income
At their core, life insurance policies are designed to cover the loss of income to your family as a result of your death. The amount of life cover you choose should therefore be enough to at least fulfil this requirement and to ease your family’s immediate financial burden. In the longer term, your life insurance benefit can be used to cover essential life expenses for your surviving family members, such as your children’s education.
2. Dependents and their needs
The amount of life cover you need also depends on the number of dependants you have and what their individual needs are. For example, your spouse may rely on you for income, or he or she may have an independent income that they contribute to the household each month. If you have several children, your life insurance policy should aim to ensure that they will all be adequately cared for in the short and medium term.
3. Covering personal debts
If you own a business, look at how the running of your business will be affected should you pass away. For example, if you have enough life insurance to cover your personal debts, your surviving family members can continue to run your business fairly seamlessly without needing to take money out of it to cover your remaining debts. For this reason, having enough life cover can be invaluable in ensuring the ongoing financial health of your family in the long term.
As one of the leading insurance providers in South Africa, Hollard offers a variety of quality life insurance products to ensure your family and debts will be taken care of when you pass away. Read more about our life insurance cover, or get a quote online now.
The Hollard Insurance Company. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider.
