Is a life insurance policy really for life?

A life insurance policy looks after your loved ones when you cannot

Having the right kind of life cover, critical illness cover and disability cover means that you and your family will be able to maintain a similar lifestyle when you pass away or when your ability to earn an income is affected. Insurance gives you peace of mind that your loved ones will be taken care of.

You don’t need the same amount of cover throughout your life

Your cover should change as your needs change. For example, the insurance needs of someone with young children versus the insurance needs of someone with no dependants and nearing retirement are very different. Life insurance is mostly about protecting your future paycheques, and replacing your income if you aren’t there, so it makes sense that you would need more cover the more paycheques you need to protect.

Some elements of life cover are no longer necessary when you retire

When you retire, disability cover is no longer necessary, as you aren’t earning an active income anymore and don’t have any paycheques to protect. Even after you stop earning an active income, though, you still need some life insurance to cover expenses like funerals and deathbed costs.

You should link your life insurance cover to the period that you need it for

With life insurance, you are aiming to cover certain long-term expenses that you have, such as a bond on a property or school fees for your kids. Not all of these needs and expenses have the same duration.

Remember, though, that expenses like your bond are for a fixed period, so you shouldn’t still be covering them on your policy when they are paid off, or there is no longer a need for them. It’s important not to be overinsured or underinsured at any stage, and this is where having a good financial adviser can be valuable.

A financial adviser can help you

Insurance products can be pretty complicated. Making the wrong decision can have serious consequences for you and your family, so it’s worthwhile to shop around for the best advice. Fortunately, many well-qualified financial advisers can answer your questions, provide clear explanations, and help you understand what you’re buying when it comes to life insurance.

Financial advisers must meet strict regulatory requirements and be properly licensed with the Financial Sector Conduct Authority (FSCA) and product providers.  You have the right to ask your adviser for their credentials and ask whether they are independent or work for a specific product provider.

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