Are you confident your life insurance covers what you expect it to?

To ensure you and your family are financially protected should the unthinkable happen, it's well worth reviewing your policy. Follow these expert tips

21 December 2021 - 12:44
Consult a financial adviser to ensure you've got the right amount of life cover.
Image: Supplied/Discovery Life Consult a financial adviser to ensure you've got the right amount of life cover.

The Covid-19 pandemic has brought into sharp focus the need to plan for “what if” moments such as death, severe illness and loss of income.

That’s why it’s now more important than ever to review your life insurance policy to check that the benefits cover what you expect them to. After all, you want to ensure that you and your family will be financially protected should the unthinkable happen.

With this in mind, we asked Discovery certified financial adviser Claire van Wyk for tips on how to keep your life cover optimal:

What’s the best way to plan for premium payments around the holidays?

Often, as we get wrapped up in all the excitement of year-end, we overspend in December. Then, when January comes around, we don’t have money to pay for things like medical aid, car insurance and life cover. 

What I always advise people to do is put aside exactly what they need to cover all their debit orders as soon as they get paid in December. If you haven't already done so, put this money in a savings account so it’s “out of sight, out of mind” until you need it for your debit orders in January. 

What advice can you offer that would be helpful in reviewing one's life cover for 2022?

You need to go through the six-step financial planning process with a financial adviser. 

Part of that process looks at your financial status and how to match your goals and needs with financial products and services. Your financial adviser will compare and suggest different plans and premiums, all while keeping your income and budget in mind. 

So sit down with an adviser and come up with a plan to make sure you have the right amount of life cover. 

A big thing for me right now is severe illness and comprehensive disability cover. With Covid-19 and all the other known health conditions linked to it, one of the things you need to look at is making sure your life cover benefits actually do cover what you expect them to. 

Should a life cover policy review also include an estate plan audit?

As a professional, what’s been glaringly obvious for me over the last few years is that we’re not prepared to die. So now when I do a policy review with a client the biggest things I check with them — no matter who they are or how much money they have — are: Do you have a will in place? And do your life cover policy, estate planning policy and your will all talk to each other? 

When I look at overall holistic planning, I’ve started bringing in more practical considerations. For instance, if a parent dies, families may lose an income. So I’ve started strongly suggesting that, as a part of the financial plan, we leave an amount of money to the guardians [guardians of whom — children? Client to confirm please]. This makes some cash available while a testamentary trust is being set up, for example, and the estate plan is being put in place.

Guardians will need this money long before the trust or estate can be finalised — especially if there are delays in these processes, as we’ve seen in recent times. 

This article was paid for by Discovery Life.