Would your family be financially secure if you die tomorrow?
It is difficult to face the fact that we are all going to die. It is not something we like to think about, but we do need to plan for it.
Is everything in place if you die tomorrow? Would your family be financially secure?
What is life cover?
Life cover takes your place if you die, in a financial sense. It replaces the income you would have earned during your working life, ensuring your family is financially secure.
Why you need it
Life cover is there to:
- Avoid your family having to sell the family home if you die.
- Ensure your family has sufficient income.
- Ensure your children continue to get a decent education.
- Death Benefit to replace your income - generates an income for your dependants and settles your debt.
- Death Benefit for lifestyle protection - helps pay for childcare, home maintenance etc.
- Death Benefit for cash in the estate - provides for executor's fees, estate duty and capital gains tax.
- Last Survivor Death Benefit - provides for estate duty at a fraction of the price of a normal Death Benefit. When you leave your estate to your spouse, estate duty only becomes payable on your spouse's death. The Last Survivor Death Benefit pays out when the last of either you or your spouse dies.
- Funeral Benefit - pays up to R50 000 within 48 hours when you or your spouse dies and up to R20 000 if one of your children dies.
- Education Protector - pays a cash lump sum for the continuation of your children's education if you die or become disabled. And, if you do not claim, we refund all your premiums.
You are covered if you die from natural causes or from an accident. There is a suicide exclusion for the first two years after taking out the benefit.
To determine your life cover, work out what portion of your income your family needs today. Because that is what they will need if you die tomorrow. The next step is to calculate the lump sum that will generate this income up to your planned retirement age, taking inflation into account. The following table indicates how much cover is needed for an income of R10 000 per month.
Note how the amount varies depending on the period to retirement.
|Income period to retirement||Life cover required|
|R10 000 for 35 years||R2,6 million|
|R10 000 for 25 years||R2,1 million|
|R10 000 for 15 years||R1,4 million|
Your spouse can use this cover to pay off debt, draw an income and continue saving for his/her own retirement.
Note: The table does not include provision for estate duty that may be required or any additional expenses the family may incur as a result of your death.