Monday, 24 May 2021

Build life insurance into your long-term financial planning

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Build life insurance into your long-term financial planning

Create financial stability for your family by making life insurance part of your long-term financial planning, says Old Mutual. 

Life insurance is a necessary part of financial planning, as it helps families remain financially resilient over the long term after a breadwinner has passed.  

Positive futures depend on long-term planning. “By taking the time now to prepare for the uncertainty of life, you can be sure your family will be financially secure, even if the worst happens to you,” explains Prudence Thipe, General Manager: Sales and Distribution at Old Mutual Mass and Foundation Cluster (MFC). 

“The first step is determining how much cover you need to ensure that your family would be able to maintain their lifestyle. For example, if you earn 85% of the family’s income and your spouse brings in the remaining 15%, life insurance needs to cover the potential 85% loss in the family’s income if you die,” adds Thipe. 

Consulting a financial adviser is useful because they can conduct a financial needs analysis and advise you on suitable insurance cover, based on your individual circumstances. 

“There should be no guesswork involved when it comes to planning for your family’s future,” says Thipe. “You need to know with absolute certainty that your family will be financially safe.” 

A good financial adviser can also help build a plan that can be adapted to suit the different stages of your life. By keeping your life insurance current, you will also help avoid the impact of inflation on future financial needs. 

Things to consider when planning for life insurance include: 

  • Your life stages 

Depending on your life stage, you may require comprehensive insurance, more so when you have children and long-term financial commitments such as home and car loans, school fees, and young children who depend on you. However, even when your children are older and have moved on and your expenses decrease, life insurance can ensure your spouse or partner is financially well cared for.   

  • The life you want for your children 

We all have dreams for our children. Life insurance is a means of providing financial security and providing them with a positive financial future. If you don’t have children, you may have other financial dependants you would like to leave a legacy to.  

  • Disability cover and severe illness cover 

By including this cover, your family is cushioned financially in the unfortunate event of a disability or severe illness. Disability cover caters to insured people who are no longer able to earn an income due to a temporary, partial, or permanent disability. Severe illness cover pays out a single amount when the insured person suffers a severe illness such as a heart attack, cancer, or stroke. 

“The most important part of financial planning is having a financial adviser partner with you to ensure you have insurance cover suited to your personal circumstances and needs,” concludes Thipe.