of us buy our first life cover when we become parents or buy a property, but there are other uses too, like providing financial security while you are alive,” says Willem Barnard, Business Manager of Sanlam Limpopo.
While some financing institutions do not require a life policy to get a mortgage bond, life insurance will still help home owners to secure the property after death. Beneficiaries can sell the property at market value should they not want to keep it.
Beneficiaries of spousal or child maintenance should consider taking out a policy on the life of the maintenance payer. “It is advisable to add rider benefits like disability cover and income protection benefits to the policy in order to continue receiving financial support even when the person paying the maintenance is unable to work due to disability or illness,” Barnard explains.
He also advises that people take out life insurance to cover outstanding debt should they pass on. “If there is not enough money in your estate to cover your outstanding debt, creditors may attach your family’s assets and they might face the possibility of losing these assets. If you had business partners and you didn’t keep your business assets separate from your personal estate, your partners might also be forced to close down the business.”
Life cover also helps to wind up the estate of the deceased faster. Estate duties and an executor’s fee is payable and many estates have a cash shortfall. Executors are then forced to sell some of the assets bequeathed to heirs in order to wind up the estate.
The policy proceeds of a life policy will usually be protected from personal creditors if a trust is nominated as its beneficiary. Barnard says a trust can protect the proceeds of a life policy that otherwise might be squandered away by irresponsible heirs.
“Although this may seem daunting, there is no need to worry. With proper advice and guidance through a detailed financial plan, a competent financial adviser from Sanlam Limpopo can help quantify how much life cover a person needs to cover all obligations.
Story: MARKI FRANKEN