Death is unfortunately a fact of life. One of the worst things about it though, is the thought of your family members being unable to cope financially once you pass away. The good news is that there is something you can do about this. By taking out a life insurance policy now, you will be able to make a significant contribution to the ongoing financial well-being of your family even if you’re not here.
How does life insurance work?
When you take out life cover, you’ll pay a monthly amount to your insurer, which is called a premium. The cost of the premium will depend, in part, on how much you want to be covered for after your death.
When you pass away, your insurer will pay out a predetermined sum to a person or entity that you choose to receive this benefit. This person is called a beneficiary.
What can a life insurance payout be used for?
If you have a life insurance policy, your insurer will pay out a cash sum upon your death, which your beneficiaries are free to use however they see fit.
However, there are some clear ways that this sum can be spent for immediate and longer-term benefit.
The most pressing financial obligation your family faces upon your death will be to settle any outstanding debts. This may include simply paying for assets that have not yet been fully paid off, such as a home loan on a house. Adequate life cover will prevent your family from having to shoulder too much debt, perhaps at the risk of losing some of their most valued and useful assets.
Bear in mind that your death may directly affect your family’s ability to meet their financial obligations, particularly if they were wholly or partly relying on your income to cover various expenses.
Part of the life insurance payment can also be used to pay for estate duties and administrative fees.
In the longer term, the life cover payout can be used to pay for your children’s education and can be invested to assist your partner and children over a prolonged period.
What to look for in an insurer
When choosing life insurance in South Africa, make sure your insurer has a proven record of quality service. Ultimately you want a policy that your loved ones can depend on after you’re gone.
The death of a loved one is a traumatic and stressful period, so a life insurer should undertake to pay the life insurance benefit quickly and without any hassle. Customer service is similarly important, so look for an insurance company that places a large amount of importance on providing the best possible experience for their customers.
An insurance broker will help you select the right level of life cover so that your family is comprehensively protected at the best possible price. Look for an insurer with flexible insurance products who partner with specially chosen insurance brokers, as they will be able to customise a life insurance policy that is perfect for you.
Having adequate life cover will ensure that your loved ones are well provided for in the event of your death. Hollard are leading providers of life insurance in South Africa and can provide affordable and flexible life cover solutions for you and your family.
The Hollard Insurance Company. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider.
