1. Work out how much life cover you actually need
Firstly you need to consider how much you owe your creditors. Should you pass away, is there anyone who will come knocking at your door, demanding a fist full of cash? Secondly, if you are the primary breadwinner, will there be sufficient capital to provide income for your dependants? Finally, you need to consider the hidden expenses like capital gains tax and estate duty, which become applicable on your passing.
2. Go shopping
Once you have determined how much life cover you actually require, its time to shop around.
We suggest going to one reliable source for all quotes. Using one source will mean that all variables (premium patterns, guarantee terms, benefit structure, etc) will be taken into account. In addition, using a single independent source, such as an independent website like ThinkMoney.co.za, a broker or financial planner, ensures that you will be able to compare apples with apples when assessing the various quotes.
3. Don’t buy a product unless you’ve compared it to something else in the market
Certain brokers and advisors only supply information relating to offerings from one company. This is not a true reflection of what is available in the market so insist on two or three quotes from different organisations in order to truly compare.
4. Never buy a life insurance product based purely on price
Cheap cover is not necessarily good comprehensive cover. You want the best deal, but you should never sacrifice the benefits for price.
5. Be aware of life insurance policies that waive medical underwriting
It is important to note that when you take life cover with no medical test, the underwriters may not pay out on death due to non-disclosure of a serious illness.
Although the conventional route of having the tests takes a little longer, it is still the safest choice to ensure a payout on death. Also, disclose all health related issues to the underwriters on application of your cover and let them make a decision based on all the information at hand. By following this route, there should not be any dispute when it comes to the policy payout.
6. Check the terms and conditions before you buy
This is a factor that is so often ignored. Remember that an insurance policy is a contract between the insured (you) and the insurer. Every contract comes with a set of rules by which each party needs to abide. You must take the time to understand what you are buying before you buy it.
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