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THE festive season looms. But as you go about making final arrangements for the holiday period, spare a thought for your life insurance portfolio. How up to date is your cover?
"We don't always want to think about the possibility of accidents happening. The sad fact of life is that they do, more often than not during holiday periods when travelling is frequent. Careful planners need to ensure that their cover is updated and that they are adequately insured," urges Ursula Torr, risk actuarial manager at Old Mutual.
Though some people think talking about protection against the financial fall-out from death resulting from car accidents, crime and violence is a negative topic, in truth it can give you peace of mind, knowing that you and your loved ones are taken care of financially should the need arise.
Besides ensuring that your car is serviced and insured against accidents, you also need to have the necessary cover for potential lifestyle-changing events. While medical schemes provide help in meeting the medical costs associated with accidents, surviving major accidents and paying for post-event services is a whole different ball game.
Disability cover could be a financial lifeline in covering the costs of adjusting to a new lifestyle in the wake of an accident that leaves you unable to work. These include the costs of physiotherapy or osteopathic treatment, purchasing and maintaining prosthetics, providing income if you can't earn, as well as modifications to house or car and meeting medical scheme shortfalls.
But what if the situation was even more dire? Life cover plays a critical role in ensuring that your loved ones are taken care of in the event of your death. It can help to ease the burden of debt such as an outstanding home loan or taxes like estate duty and other administration costs.
Death benefits can also be used to generate an income when you are no longer able to provide your family with one. If you are a business owner or partner, it can help your family or partners to continue running the business without suffering added capital strain because of your death.
It is important to check that premium payments on your existing cover are up to date. A year-end bonus can be used to get your payments up to date: failure to do so could mean not having cover at all during the festive season.
Torr makes a further suggestion: "Consider the type of cover that is on offer. A cheaper monthly premium may not necessarily be the best option for you. You may need 100percent of the benefit when you claim, as opposed to receiving only a percentage based on the severity of your situation.
"For example: Some life insurers may offer tiered payment according to "Whole Person Impairment" tables, which look at what percentage of the body is impaired, and what percentage of cover should therefore be paid out.
"Sit down with your financial adviser to assess your needs and discuss the cover that best suits them.
A holistic financial plan should not only give consideration to disability and life cover to protect you against the financial impact of catastrophic health events, but should also take account of vital aspects such as making provision for retirement; healthcare needs and saving for your children's education," Torr says.