Life Assurance – mind the gap

« Back to “Personal Financial Planning”

Statistics show that one in five people will die before the age of 65. It’s a worrying figure and something that most of us would rather not think about, but failure to invest in life assurance could have disastrous consequences for your family.

Those who die in middle age could leave their dependants facing a very hard future unless they make adequate plans. Despite this, many families have little or no life assurance cover.  The latest Insurance Gap study, conducted by True South Actuaries and Consultants, says that there is a R7.257 trillion life assurance gap in South Africa.  The research found that people vastly underestimate the level of cover that is required.

The first time that many people think about life insurance is when they buy a home. Taking out enough to cover the cost of the bond is fine, provided that you have no dependants. But as soon as children come along, the situation is altered dramatically. In reality, bond repayments probably account for only 30% of your total household expenses. How will your family manage to pay for the other 70%?

You need to be sure that your family is adequately covered against such a contingency.  After all, in the event of your death, you want to be sure that your loved ones are well-provided for financially – that they won’t have to sacrifice their standard of living, or be left with debts to cover, particularly if you are the main breadwinner and they have always relied on your income.

Think about it for a moment. Imagine if your children had to give up the benefits of a good education because there wasn’t enough money to cover the costs. Or what if your family home had to be sold because there was no money to meet the bond obligations? Consider your family’s future living expenses, which include annual recurring expenses, as well as occasional capital expenditure, such as buying a new car.

These are just some of the reasons why knowing how much risk protection and life assurance you need is such an important factor to consider when planning your finances.  Get in touch for a personal needs assessment based on your particular situation and requirements.