No major debts when you die? You still need life insurance – and here’s why
27 Mar, 2024

Yaaseen Albertyn, Executive Head of Business and Client Solutions at Metropolitan



If insurance is considered a grudge purchase, then life insurance – insurance that is meant to cover your debts when you die – is often met with some degree of resentment. You know it’s important, but who wants to think about what happens after you pass away?


And so, somewhat understandably, when money is short, life insurance is one of the first things to go – especially when you have major financial commitments, like paying school fees.


But this is not a good idea, says Yaaseen Albertyn, Executive Head of Business and Client Solutions at Metropolitan.


“Don’t be tempted to drop your life cover just because you don’t have any major debt that needs to be covered in the event of your death. Life cover doesn’t only protect your loved ones in death; it also looks after you and your dependents should you become critically ill or disabled and no longer able to earn an income or provide for your family.”


Another reason that life insurance is important is that it allows the policyholder to leave money behind for their family as a form of inheritance, helping kickstart their journey towards generational wealth. “For those who plan on leaving assets in their estate to their loved ones, they must also consider the tax implications attached to these assets. Their family might need some liquidity to access their inheritance without needing to sell assets to free up funds – and this is where life insurance can assist.”


How much life cover do you need? “The simplest rule of thumb is to take your annual income and multiply it by 10, which will give you a rough estimate of how much cover you should aim for,” he advises.


However, Albertyn says that it’s important to know that this is a rough guideline and that this figure may vary, depending on your age.


“For example, at around 65 years old, you might only need around five times your annual income in life cover, as you would (hopefully!) have saved enough for retirement. If you are in your twenties, you might need twenty to thirty times your annual income because your dependents would be younger, and your income is expected to grow as you age.


“If you wanted to factor in the cost of tertiary education tuition, for example, you could also add this on to your total sum insured. Using the simplest rule of thumb, if you earned R250,000 per annum, you might need R2,5M in life cover, and then you could add on tuition costs of around R300,000 per child to the amount insured.”


When times are tough (when aren’t they?!), Albertyn shares a few things you might consider doing instead of dropping your life insurance.


Consider trading your funeral cover for life insurance


If you can only afford one, keep in mind that many life insurance policies already have a funeral benefit built-in, which can be quickly accessed in the event of death to cover funeral-related expenses before the life insurance payout, which is subject to normal claims underwriting. “However, make sure to check that your life insurance does indeed include a funeral benefit,” suggests Albertyn.


Instead of letting your policy lapse, look at decreasing your premium


Instead of losing your cover entirely, why not talk to your financial services provider or adviser about decreasing your cover and paying a reduced premium? “Many people even find that their cover needs have decreased over time – for example, many people increase their life insurance to back a bond, but once a house is paid off, you might want to look at reducing this.”


Some providers, such as Metropolitan, also offer policyholders more flexibility, allowing them to pay their premiums at any time during the month and via various payment channels. “We also offer a premium skip benefit, and if you’re in a bind and have no other option but to allow your policy to lapse, we will still give you full cover when you restart your plan,” he says.


If you’re approaching or in retirement, check to see if your policy offers a cash-back or paid-up benefit


Some providers, such as Metropolitan, will offer you a fully ‘paid-up’ benefit when you reach 65, allowing you to keep your cover but without any more premium payments, while others include a ‘cash-back’ type benefit, whereby if you live up until a certain age and have paid all your premiums, the policy will pay out a lump sum as a bonus. “It’s worth checking in with your financial services provider if your policy offers this – it might be a nice, unexpected windfall when you need it most,” says Albertyn.







@Yaaseen Albertyn
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