Planning for your future should include good coverage through a judicious pick of policies. You won’t necessarily get rich with policies as against investments, but nevertheless they are vital for peace of mind, stability of income, and family protection. Policies provide a strong base from which, once established, you are able to investigate riskier wealth-building investment opportunities.
Whether you are purchasing endowment policies or insurance policies, the amount of insurance is always determined by your specific situation. When building your portfolio, you need to factor in: age, children, lifestyle, health, employment benefits, daily living, bond repayments, debt, taxes, education and funeral expenses.
The chief benefits of life insurance usually are health and education of your children. Even just focusing on those aspects, it’s generally recommended you aim for insurance policies that will cover your annual income up to ten times. This yardstick is not always affordable, but it does give you an idea of the changing value of money and what you need to aim for, in order to be effective.
Your choice of policy type is important at this point and will obviously affect the financial outcomes:
Whole life: As long as you continue to pay the monthly premiums, whole life covers you until you die.
Term life: On the other hand, you may choose a policy that covers you for a set amount of time or term of time.
Health Insurance Policies
Statistically, they say, you and your family are just one serious illness away from bankruptcy. While the best and least expensive option may be participating in your employer’s insurance programme, today’s medical insurances do not cover everything, and there are a myriad of factors that can cost you more than you have prepared for. So supplementing your company healthcare arrangement early on, is a wise choice.
Something that should be included here is long-term disability coverage – something most people don’t want to think about, yet a fair percentage of a workforce may become disabled for a number of reasons across accident or injury possibilities. Your policy choice here should ensure you are covering health, disability, loss of income, and death.
Losing your job due to disability should be of prime concern. Even if you have good health insurance and a life insurance policy, you may not be prepared for the day you are unable to work for months, or ever again. While health insurance pays for hospitalisation and medical bills, you’re still left with those daily expenses your salary would have covered.
Even if you have company disability insurance, there are many other private choices you can make. However, there are some things to consider before purchasing insurance on your own: Choose a policy that you can continue after retirement. Retirement is the great X in life – a time when income might reduce and medical issues and expense increase. Whilst working, you will need a policy that guarantees income replacement, but check the terms. Most often policies only pay out 50% to 60% of your income. And coverage may only last for a maximum of three years and have some significant exclusions. Costs will be based on several factors including age, lifestyle, and health. So read the fine print.
While insurance is expensive, not having it could be far more costly
People make the mistake of avoiding life insurance policies for a range of arguable reasons, but in the long-term, planning your finances without policies is not a wise choice. Erroneous thinking is usually coloured by emotion:
- Nobody likes discussing their possible death.
- Planning current outlay for an expected future pay-out which may never be seen by the policy holder, is difficult for some to get their heads around.
- People sometimes suspect that the insurance agent may be unethical and try to sell the highest premium policy possible, whether it meets the individual’s needs or not.
- Often there is uncertainty that the policy may be overpriced when compared to similar policies offered by other companies.
- There is belief that the policy will offer poor investment returns, and may not offer all possible tax advantages.
Cannily planned policy purchase offers enormous advantages to the wise:
- an enforced savings programme
- a valuable income replacement for your beneficiaries
- a ready source of cash at a time when it’s likely to be needed most
- a bulwark against rising health expenses
- a safety net for your working income
- a nest egg to assist with the cost of education
- And policies at competitive prices, along with the advice of a valued financial planner, will reduce the uncertainties of life – and that just makes life better.
Check your policies, check your life
VeriFi is an online tool that provides you with an immediate and up-to-date overview of all your life insurance and investment policies by sourcing information from all the major life insurance companies – and presenting the information in a comprehensive report.
With VeriFi you are able, for no charge, to access information on all your life and investment policies at a glance. You are able to check the types of policies you have, the names of the insurance companies providing the cover, the nature and extent of the insurance cover provided – and other vitally important information such as the details on your policies being correct.
To find out more, please visit: www.verifi.co.za