It’s very difficult to know if you need personal insurance or not. There will be some people (usually friends, family and Facebook warriors) more than happy to dish out advice or throw the contact details of their broker your way at a second’s notice.

The strange thing is, in an industry that is almost cripplingly legislated and regulated, with brokers that run the risk of litigation, debarring and fines of many millions of rand in the event of misleading or incorrect advice, what gives those advice givers the experience, understanding or right to give the advice in the first place, and then (in some cases) add pressure on a person to do what they believe to be right?

So, do you need life insurance or not? And is it as simple as a yes or no? Let’s unpack this a little for your peace of mind, and to give the horde of freelance advice pushers something to chew on.

In almost every situation, dying is expensive.

There are different levels of reasons for needing life cover. Some are ‘must have’, some are ‘should have’ and then there are the ‘nice to have’.

 

MUST HAVE

When you die, any assets that are linked to your name that have outstanding liabilities on, need to be settled. That means your bond becomes due, even if you are joint owner. This is due to a change in the law a few years back. No longer can your spouse simply take-over the debt.

Besides your liabilities, there are death taxes. There is Estate Duty and Capital Gains Tax. There is the Executor fee as well. These estate wrapping-up need to be handled correctly, and by someone WITH YOUR BEST INTEREST at heart.

 

SHOULD HAVE

When a person dies, their estate, including properties, investments, bank accounts, etc. are all frozen and cannot be accessed unless through the Executor of the estate. This can be a painful and time-consuming process that could run for years and cost from a few thousand rand up to a few million rand.

Having something that is left to your spouse or family to cover their needs and allow them to live without financial strain on top of emotional anguish at your passing, can be the difference between helping or harming them.

There are rentals, school fees, food, transport, subscription, communication and other costs that we often take for granted and forget about, but that are as much a necessary part of life as air and water.

 

NICE TO HAVE

These extras are the feel-good bits that you have in order to leave a legacy. Whether that is enough for your surviving family members to purchase a home that provides rental income, or a donation to a philanthropic cause, it’s your way to not only leave people at the same level as when you were alive, but actually better off financially.

 

OTHER FACTORS

You may be considering cancelling an existing policy because you either can’t afford it right now, or you don’t know if it’s important.

Yes, you may be able to cancel it and restart a new one when finances improve, but the main question that you need to ask is this, “will I be insurable in the future?”

We don’t know just how our future looks. We may be diagnosed with a life-threatening condition such as MS, HIV, Motor Neuron disease, Cancer or any one of hundreds of conditions. So, what happens if you cancel your policy where you have cover, and by the time you want to get cover again, you find out that you’re uninsurable, or new cover comes with exclusions or loadings on what are now ‘pre-existing conditions’?

 

In conclusion, when it comes down to it, there are no MUSTS in life. If you have cover and never need it, then good for you, however what if you need it and don’t have it? Life cover isn’t something that can be added as an after-thought. There is no closing the stable door after the horse has bolted.

A registered, experienced and independent broker that has a proven pedigree and that you have carefully checked-out and tested should be the only guidance you put stock in, and try to get council from a few of these licensed professionals. And please for the love of sanity don’t just chose someone that is recommended or that is ‘familiar’ on those criteria alone. It’s your money, so please take yourself, your family and your money seriously enough to actually chose someone based on CALIBER and EXPERIENCE over who they know or their relationship to you!

So, what do you say to all the friends, family and Facebook warriors? Simply ask them if they would be willing to put their personal guarantee of handling all of your financial obligations in the event of something happening to you? If they are willing to contract to that, then great. Go ahead and cancel. If not, then you may want to make your own mind up. It is YOUR life and YOUR business after all.

 

About The Author

Steve Hughes

Steve Hughes is an independent financial advisor specialising in personal and business solutions. He has a passion for empowering people through better understanding and has created a fresh and highly sought-after approach to financial planning. He is the founder of the PLATINUM model of fringe financial services and the PLATINUM EVENTS, and you can catch him on LIFE MATTERS, OneFM 94.0’s weekly business & finance show which he produces and presents. As a private wealth consultant and business owner, his approach to personal and business consulting is industry leading, and it is his desire to reshape the financial service world that drives his passion. Steve can be reached at steve@stevehughes.co.za.

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