Category Life Insurance

Key insurance policies to have in place to help you navigate unforeseen life events

07 February 2023 Lee Bromfield, CEO of FNB Insurance
Lee Bromfield, CEO of FNB Insurance

Lee Bromfield, CEO of FNB Insurance

Given the current high cost of living and uncertain economic environment, being caught off guard by an unforeseen life event may place one in a far worse financial position if no insurance policies are in place to safeguard themselves and their assets.

The reality is that South Africans continue to face trying times that weigh heavily on their livelihoods. As people are preparing themselves financially to weather these tough times, they also need to work on reviewing all their insurance policies including short-term and life covers to ensure that they’re in good standing and that their covers are still relevant and sufficient for them. Major life events or changes also generate a need for financial protection for loved ones, below are some examples of important life events for one to consider insurance cover:

• Starting a family - When a spouse is partially or wholly reliant on the other spouse’s income to maintain their current lifestyle, the necessity of protecting loved ones after passing should become a priority. In addition, like getting married, a child’s future is dependent on both parents’ abilities to support them. Should something happen to one of the parents, life insurance that includes funeral cover can help. Expenses such as childcare or education can quickly add up if other financial means are not in place.

• Career changes resulting in financial changes – In most cases many working couples do not make the same amount of money. Changes in one spouse’s career that give rise to a much higher (or lower) salary can greatly alter the couple’s lifestyle. Consequently, the ability to maintain that lifestyle could become challenging should one of them pass or face critical illness or disability. Covers such as the income protect, critical illness and permanent disability cover offers a lump sum pay-out should you be unable to perform your own occupation or if you are diagnosed and suffer from a permanent impairment.

• Retrenchment - The shock of being retrenched coupled with the financial stress may leave a person uncertain about how to proceed. Retrenchment cover for this season of life, ensures that one isn’t exposed to greater financial risk when they’re cut back at work. Typically, retrenchment insurance pays up to 70% of your taxable salary (depending on your tax bracket) for up to six months. The idea is that retrenchment insurance payments over six months will allow you to meet your financial commitments, until you find a new source of income such as finding another job or starting a business.

• Buying a home - Having the financial means to settle any outstanding debts after a death—such as a mortgage—can help those who relied on that person’s income or other monetary resources. Insurance such as the Dynamic life cover that adjust in line with one’s outstanding bond amount and the Debt protection covers your outstanding debt in the event of death, disability, or unemployment/inability to earn an income.

• Aging parents - Purchasing a life insurance policy for one’s parents can drastically ease the financial burdens that fall on children as their parents age and ultimately pass on. In addition, ensure that your funeral cover policies are in order to guarantee that you offer them a dignified send off.

In the event of unforeseen circumstances, the most important thing is to ensure that you or your family have sufficient cover to avoid financial distress. It’s important to read through your policy and understand the limits of the cover in place, through your insurer’s digital channels or a chat with your insurer. In addition, discuss with your insurer the options to increase these limits where the biggest financial strain could be for you.

It’s also important to do your homework in relation to what cover you need and why to ensure that you’re adequately covered. FNB Life offers an array of insurance options such as life cover that includes spend Protect and a Funeral Benefit at no extra cost, retrenchment, critical illness, disability, health as well as funeral cover that covers up to 21 family members under one policy and provides a quick and easy claims pay-out.

While it may be that for some, reviewing their insurance policies may be the last thing on their minds at the moment, the consequences of neglecting such could be dire. For most families, the various insurance covers that they have will continue to serve as an important defence against possible financial ruin over the tough times.

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