My biggest debit order after my mortgage, is for life cover. It’s a crucial part of my financial plan. In this sixth episode of the Santam Insure your Future Money Bootcamp, I’m joined by Mapalo Makhu and Johann Steyn, a certified financial planner at Rainmaker BlueStar by Sanlam, as we delve into the often complex issue of life cover.

Understanding risk needs

Johann breaks down how we can figure out what the right amount of life cover is. He recommends a comprehensive financial plan that considers the cash flow needs of an individual’s financial dependents and capital responsibilities like mortgages, car loans, and children’s education. This approach ensures that you have the right lever of life insurance, and that it is tailored to your specific circumstances.

The role of employee benefits

For those employed by companies, employee benefits can play a significant role in their financial planning. Johann discusses the importance of understanding these benefits and how they can be integrated into an overall financial plan. He also highlights the difference between approved and unapproved life cover, explaining the implications of each.

Navigating the complexities

It is important to understand the different types of insurance available, such as critical illness cover, disability insurance, and income protection. Johann explains each type in detail, providing valuable insights into when and why they might be necessary. For instance, he points out that for young people, income protection might be more appropriate than life insurance, because their biggest asset is their potential to earn income.

The cost of life cover

The episode also touches on the cost of life cover and how it can become more expensive as one ages. Johann advises considering different premium patterns and understanding the long-term costs involved. He also discusses the options available for those who find their premiums becoming unaffordable as they get older, such as converting their life cover to a different type of insurance.

This episode is a treasure trove of information for anyone looking to understand life cover and its role in financial planning. Whether you’re just starting your financial journey or looking to adjust your current plan, the insights shared in this discussion will help you make informed decisions.