A life insurance contract is typically between a client and an insurance company, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person (often the policyholder).
Depending on the contract, other events – such as terminal or critical illness – can also trigger payment. Other expenses, such as funeral costs, can also be included in the benefits. The inclusion of other events can, however, become confusing for the consumer, as some of these events require separate cover.
“Sometimes all the covers can be integrated and sometimes they are standalone,” says Ana Scott, executive financial planner at Momentum.
She says that people often think they have adequate cover with, say, R2m life cover. However, in the event of a disability, for example, the claim can actually erode the life cover. If the disability cover was for R1m, and you claim on it, it could deplete the life cover to just R1m as opposed to the full R2m.
This is one of the reasons Scott advocates for the use of a financial planner to design what she calls a risk portfolio that is well-diversified.
“What you do with investment policies is what you must also do with risk (insurance) policies.”
Scott advises diversifying the risk, ensuring that you’ve got a little bit of cover in place – in case of death, liabilities, critical illness and loss of income.
Life cover
Denne historien er fra 22 October 2020-utgaven av Finweek English.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra 22 October 2020-utgaven av Finweek English.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
