Make sure you have enough life cover for 'in case'

If you look back at your long-term financial planning it is impossible to imagine how you could have embarked on a really meaningful plan without a healthy measure of life cover.

If you look back at your long-term financial planning it is impossible to imagine how you could have embarked on a really meaningful plan without a healthy measure of life cover.

Most of us began our working lives with very little in the form of material assets but as we progressed in our careers with every pay cheque we received, we tried to set aside a little to start creating wealth, albeit modestly.

If we heeded the good advice of our fathers, we most probably signed applications for affordable basic life cover policies. Life cover was taken for "in case" of death as a matter of course.

"In case" is one thing we all know about, but sometimes prefer not to think about it too seriously or discuss with our family and friends as openly as we should. So I will discuss it with you now.

If we men were honest we would all agree that the women in our lives are far better at taking care of "in case" than we are.

Who of us can say that we have never had our womenfolk remind us that financial independence is the ideal to strive for?

While creating wealth we must ensure that we have taken out sufficient life cover - just "in case." Heaven forbid that one should not live long enough to see the growth of one's financial assets to maturity or that your spouse is left with insufficient finances when "in case" happens 'to you.

Certain life assurers now offer cover to HIV-positive people. These products are linked to continuous underwriting requirements that enables life assurers to reward people who are managing their health appropriately and effectively, which in itself is an incentive to take better care of one's health.

With life cover we are also protecting our estate until our investments mature. A R1million life policy 15 years ago was considered "a big one" because a home cost about R200 000, a new car about R75 000 and education at top private schools and universities was way, way below what it is today.

A million rands 15 years ago would have been sufficient cover, but that is not the case today.

We still see that figure as a huge amount of money and it takes a lifetime to create anything like it, but it is not enough.

Spending that amount today takes a few seconds. Buying an average home will do it for you. A million-rand investment will only pay your heirs about R8000 a month, based on current yields. Then there's the taxman and estate duty. So, do you have enough life cover for "in case"?

lThe writer is director of Pioneer Financial Planning. Visit www.pioneer.co.za or e-mail help@pioneer.co.za

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