Life cover cheat sheet: The five times you need to do a review
Not to quote the movies or be corny, but with great power comes great responsibility. As life gets busier, you become more important and more people look to you for support you will find yourself in bed wide awake, long after you should be sleeping, suddenly remembering the “life admin” you need to get done.
Unfortunately ensuring that your life insurance is regularly reviewed is just one of those things that gets pushed to the bottom of the priority list.
“As your financial circumstances change, it becomes essential to review the sum insured, as it may no longer be sufficient to cover the needs of your family or dependants” reminds Lee Bromfield, CEO of FNB Life adding that there are certain life events or changes that should automatically prompt a call to your provider.
When taking out a home loan your financial institution will require that you have life insurance in place to cover the debt in the event that you pass away. Depending on the loan amount you may decide to cede a portion of your existing life cover against the home loan. This will leave your dependents under-insured. You will have to take out additional life cover.
Adding to your family
One of the common reasons why people take out life insurance is to protect the financial future of their children. When you have a new child or the number of your dependants increases, it is important to ensure that your life insurance is adjusted to accommodate the changes.
When your financial situation improves, you should update your life cover amount accordingly to ensure your dependants maintain the same lifestyle should you pass away. For example, you could have moved into an affluent suburb and decided to take your kids to a high-end private school. Should you suddenly pass away your income will be gone and your loved ones will be left to try and deal with the financial stresses on top of everything else.
Getting married and starting a family is a commitment that comes with a number of financial responsibilities. Updating your policy cover and including your partner as a beneficiary becomes essential, especially when you are married in community of property.
Should you become sick you may have to consider updating your life cover amount, based on your age and individual circumstances. Furthermore, depending on the nature and severity of the illness you may have to claim from your insurer anyway. This would also give you an opportunity to review your policy and the sum insured.