By Schalk Malan
We are living in a tough economic climate – the South African economy and the global economy are not at their best. This makes it even more important to make your money go far. Your clients’ most valuable asset is their ability to earn an income so they can secure they and their families’ future. Protecting that asset becomes even more essential during tough times.
For your clients with children, protecting their income becomes a bit more complex as childcare needs increase at a higher rate than most of their other needs. The cost of day care, school, university, books, extra murals, sporting equipment and medical aid for children – to name just a few things – increases at a rate much higher than inflation. That’s why it’s imperative that life insurance products keep up with those changing needs, allowing you to structure your client’s policy in a way that factors in that they might need the cover for their childcare needs to increase at a higher rate than the rest of the policy.
No parent wants to think of suffering from an illness or injury that leaves them unable to work or earn an income – or worse, die. Getting appropriate cover – that can truly take care of all their children’s financial needs – will leave your clients with peace of mind. Your clients should take into account what their children’s financial needs are when they are alive and what those needs would be should the unthinkable happen, and the client passes away. The needs of clients and their beneficiaries are constantly changing, so you might want to check whether your clients’ policies are flexible enough to allow them and their beneficiaries to decide how they would like to be paid out at claim stage, when they have the full picture of what they’ll need.
It’s also vital to ensure that your clients’ children are also covered on the policy – for the same medical conditions as their parents – should they become seriously ill or injured. There are strict laws surrounding the amount of cover parents can get for their children in South Africa – and for good reason. We want to avoid cases where clients benefit financially from their children’s illnesses, injuries or death. There are, however, insurance providers that will pay out up to a maximum of R10 000 (the maximum allowed by current legislation) should a client’s child pass away, going some way towards easing the financial burden in such a tragic situation.
There are also some insurance providers that will also pay-out clients’ temporary expenses cover for a certain period should their child become seriously ill. This allows parents to take time off work so they can take care of their children without worrying about the impact on their finances.
- This article was first published by FA News on 22 March 2018. Click here to read the original version.