Do you have life insurance? And do you know what it covers?

October 15, 2014

You might have noticed that I’m writing more financial and insurance-related posts. It’s not because I’m sidelining as an insurance broker. Rather, I’ve partnered with some people to help you – whether it’s trying to figure out your finances, or what cover you need for your future and your kids.

So how do you know if you’re sorted with your cover or retirement savings, or if there are any gaps with what you’ve got? As I wrote about last week, a good place to start is Momentum’s MyScore solution on the Financial Wellness part of the Momentum site. To recap, MyScore can assess your overall financial wellness through a series of questions, and will identify any gaps in your cover.

 

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Once you know your score what is the next step? Armed with this information you can approach a financial advisor to assist you to get the correct amount of cover for your needs. I know the idea of a financial adviser can seem intimidating, but the good ones won’t judge or speak down to you if you’ve gone over budget by buying another pair of shoes. The peace of mind you achieve from getting your rands in a row is well worth the effort.

Momentum policyholders, who are also members of Multiply, the wellness and rewards programme offered by Momentum, and who complete the MyScore solution, earn Multiply points for doing so. Multiply members can also earn points for participating in various other activities such as completing the online financial wellness assessment and Money Sense questionnaire, and keeping their profile and contact details updated.

The more points Multiply members earn for taking control of their health and financial wellness, the greater the discounts they can enjoy on a wide range of products and services. Multiply members can also save up to 60% on their Momentum life insurance policy.

Want to test your life cover knowledge?

Q: How much life cover should you have?

The rule of thumb in terms of life cover is to have 10 times your annual earnings plus debt. So say for example you earn R500 000 a year and have R1 million in debt , then you would need cover of R6 million. This would go a long way to ensure that your family are taken care of.

Q Is that enough life cover for everyone?

How much cover you have depends on your circumstances. This is why it is important to seek the services of a financial advisor. They will be able to recommend the correct amount of cover for your personal circumstances.

Q: If you are married and one of you is the primary breadwinner is it important for the other spouse to have life cover?

Definitely! If she dies it will result in a lot of extra costs for the family, especially if there are children to take care of.  The surviving spouse would have to cover the cost of child care and all the other costs associated with raising a family.

Q: Does everyone need life cover?

No, if you have a good investment portfolio that will produce enough income for your family in the event of your death then you would probably not need it. Also if you are young with no dependants or debt then you may also hold off for a while and rather put the money into investments. However it is a good idea for everyone to have disability and critical illness cover if they are reliant on their ability to work to produce an income.

 

PS: Keep yourself informed on the the latest and best Tweets on #financialwellness

 

 

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