SPECIALISED LIFE INSURANCE IN SOUTH AFRICA

Life cover is a type of insurance policy designed to protect your loved ones financially in the event of your untimely death, especially if you are the primary income earner or breadwinner of your family.

Your family can use the payout however they choose to. For example, they can use the money to cover daily living expenses, fund the children’s education, pay off financial burdens (like mortgages, car loans, credit card debt, or medical debt you may have left behind), or cover funeral costs.

Life cover gives your family some stability and peace of mind, knowing that their financial needs will be met even if you’re no longer around to provide for them.

The amount of life insurance you should buy depends on your unique circumstances, such as your income and your current life stage (whether you are single, married with children, retired, etc). You also have to consider outstanding debts (like mortgages and car loans) and future financial goals (such as your children’s college funds, your spouse’s retirement savings, or legacy planning) when calculating your coverage needs.

A common rule of thumb is to have coverage equal to 5 to 20 times your annual income in life cover, but this can vary based on individual circumstances.

Different insurers have different requirements. In general, you must be:

• A South African citizen living and working here. Depending on the insurer, permanent residents may also qualify.
• Between the ages of 18 and 65. Some companies may provide cover to applicants over 65, but the premiums are typically higher.
• In relatively good health.
• Employed for at least 6 months or earning a regular income.

Life insurance premiums are usually paid through debit orders. It’s best to set up the debit order on the bank account where your salary is deposited to ensure that you don’t miss any payments.

Insurers look at your risk profile when calculating your premium. Various factors can impact your risk profile, including the following:

• Age: Younger people pay lower premiums because they are less likely to die from natural causes at their age. This is why it’s advisable to take out a life cover while you’re still young.
• Gender: Women typically pay slightly lower premiums because statistics show that females live around 6 years longer than men.
• Lifestyle: If you do high-risk sports like skydiving or any hobby where the risk of injury is higher, an insurer will charge you a higher premium. Similarly, smokers pay higher premiums than non-smokers.
• Health: Pre-existing health conditions or a history of illness may result in higher premiums.

Yes, many life insurance policies have waiting periods — a specific period after the policy’s start date before certain claims can be made. In general:

• There’s no waiting period for accidental deaths.
• There’s usually a longer waiting period (often around 2 years) for claims related to suicide.
• Depending on your state of health, your insurer may impose additional waiting periods related to specific ailments. These would be communicated to you upfront.

Carefully review your policy document to fully understand the applicable waiting periods. The commencement date of the policy — from which the waiting period starts — should be clearly stated.

Yes. Insurers understand that your protection requirements will change as you age, and most of them will allow you to increase your life cover (subject to their approval). Depending on your policy, you might be able to add riders or additional benefits, such as critical illness or disability income cover.

Do note that you may be required to undergo a new health assessment (including an HIV test) to increase your coverage and that additions to your coverage or benefits will likely result in higher premiums. Always consult with your insurance provider to understand the specific options and requirements for your policy.

Failing to pay your life insurance premium could cause your policy to lapse (meaning it becomes inactive). In some cases, your coverage may be reduced to a lower level.

Are you experiencing financial hardship? Communicate this with your insurance provider. They might be able to set up a payment plan to spread out your premium payments over a longer period or explore temporarily reducing your coverage to lower your premium. Some policies also allow you to borrow against the policy’s cash value.

While it may be tempting to cancel your life insurance to save money, it’s more prudent to work with your insurer to maintain your coverage and safeguard your loved ones’ financial future.

Yes. Life insurance is primarily a protection tool, but it can also be a wealth-building vehicle. When a life insurance policy pays out a lump sum benefit, your family can use that money to:

• Invest in stocks, bonds, real estate, or other assets that can appreciate over time.
• Start or expand a family business.
• Pay off remaining debts to free up more money for investments.
• Create a family foundation to preserve and grow wealth for future generations.
• Use the payout to pay any estate duty taxes payable on your inheritance.

Strategically using life insurance proceeds — along with careful planning, wise investment decisions, and a long-term perspective — has helped many families establish strong financial foundations for generations.

Reach out to the insurer to start the claims process. They will provide you with specific instructions and necessary forms. Then, prepare the required documentation, which typically includes:

• Death certificate
• Policy documents
• Identification documents (both of the deceased and the beneficiary)
• Proof of relationship between the deceased and the beneficiary (if applicable)

Submit the completed forms and documents to the insurer through their preferred method (such as mail or email) and stay in touch to track the progress of your claim.

File your claim promptly — preferably within 3 months of the insured’s death. Always refer to the policy documents or consult the deceased’s insurance agent for accurate guidance.

Most insurers do require a medical exam, and they might ask for an HIV test as part of the underwriting process. This is usually a simple saliva swab and is often covered by the insurer (you don’t have to pay anything).

Insurance companies use HIV testing to assess your overall health risk and determine the appropriate premium for your policy. Refusing an HIV test may result in a declined application or reduced coverage.

Be honest and accurate when answering health questions on the application form to make the process smooth and efficient and to make sure that future claims are not denied.

Your beneficiary is the person or entity designated to receive the death benefit when you pass away. You can choose any individual or organisation as your beneficiary. For example, you can name your spouse, your children (either individually or collectively), a trust that allows you to specify how the funds should be distributed, or a charitable organisation.

Be sure to review your beneficiary designation periodically, especially as your life circumstances change. You may want to update your beneficiary designation if you get married (or divorced) when new children are born, or when there are major changes to your financial goals and needs.