Three tips for getting life insurance that guarantees your children will have what they need when you’re gone

It’s something no parent ever wants to think about – dying before their children are not yet old enough to take care of themselves.

It’s not just a question of who you can trust to look after them and give them all the love they need; it’s also a question of who will pay for the good education you want them to have, the holidays you know they’ll love, and the extra murals they show such talent for.

Providing for your children’s needs should you pass away prematurely is one of the main reasons why parents take out life insurance. Here are three things you should look out for when considering taking out life insurance to protect your children in the future:

1. Education costs
Education costs typically increase when a child goes from high school to university. Many insurance products don’t make provision for this, which leaves policyholders exposed. To protect against this risk, BrightRock offers the tertiary education step-up. It allows parents to provide for an automatic increase – of 50%, 100% or 200% – both in cover (pre-claim) and in pay-outs (post-claim) for the education needs of a specific child at the end of the year in which that child reaches the age of 18 years. This not only makes it possible for parents to provide for the expected increase in tuition fees but also for additional costs – for example, transport and accommodation at university. What makes this feature even more attractive is that the increase in cover is priced for from the first premium, which means that when it comes time for the cover to step up, you don’t get a nasty step up in your premium at the same time.

2. Lump sum payout vs recurring payout
This is a tough decision for parents to make, and it is impossible to see into the future and know what’s best. Certain life insurers like BrightRock don’t ask you to make that choice prematurely. You can structure your cover so that your children’s guardians can be given the choice between a lump-sum or recurring pay-out at the time of the claim, whichever structure will be best for your child. However, if you are worried that your child’s guardian won’t be responsible enough with a lump-sum pay-out, you can also choose to buy cover that only pays out as a recurring amount every month so that you can be sure that after your death the funds will be used to pay monthly school fees, and not all lost with one spin of the roulette wheel.

3. Flexibility
Insurance cover that’s flexible is definitely the best choice for you and your family. You want a policy that is tailormade to your needs and takes into account life’s unexpected surprises as well as the events that are anticipated. For example, with a BrightRock policy, when the childcare cover is no longer required, such as when the child becomes financially self-sufficient, you can convert childcare needs premiums to premiums for other needs. In addition, you can structure your cover to continue until the child reaches the specific age at which you expect them to be able to take care of themselves, not just until the age of 18 or 21 years. And with BrightRock, if your child gets accepted into that prestigious university that they’d be working hard to get into, you can use your extra cover buy-up to increase your cover without any medical underwriting.

This article first appeared on FA News on 30 April 2020 and is attributed to Schalk Malan, BrightRock CEO.

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