INSURANCE - LIFE INSURANCE POLICIES



Life insurance is an important part of your wealth planning as well as providing financial protection.

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WHY IS IT NECCESSARY?
  • For a spouse or your estate to be burdened with a massive bond on a property is simply not wise. Having a life policy in place as security against the bond, ensures that the home, a major asset, is fully paid in the event of death.
  • The bank, in most cases will also insist that you take out a life policy, ceded to them, so that if one of the purchasers die, the bond is covered, thereby protecting their risk. Do note that you DO NOT have to take out this insurance through the bank but can look at other providers.
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WHAT DOES IT COVER?

Your life policy pays out your beneficiaries of your estate in the event of your death. Obviously, the bank has the first claim against the policy and the bond will get settled first and the balance paid out to your estate.

Check with the bank what their requirements and conditions of the life policy are so that when you go and get quotes, you can make sure you meet these critiria up front.

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SPECIAL NOTES
  • Check out what sporting and other activities such as skydiving etc are not covered..
  • As your bond amount decreases, you could actually reduce your life cover amount and save on the premium. Consider this very carefully though as the older you get, the more expensive life cover becomes.
  • If you are going to reduce your life cover, look at options of converting the surplus premium into other endownment or savings type policies. In this way, you could build up a nice payout for the same time that your bond gets settled
  • Very importantly is to look at Disability options on the insurance as this traumatic event in your life will place as much of a financial burden on the family as death itself


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