Is your life insurance enough to cover your family? We unpack what you need to know when you take out life insurance to cover your family.
Many people that take out a life policy base the sum insured on the amount of money that will be required to protect their dependents financially should they pass away. Lee Bromfield, CEO of FNB Life adds that it’s essential to review the sum insured, when your financial circumstances change, as it may no longer be sufficient to cover the needs of your family or dependents. Below are 6 things that require you to update your life insurance:
Buying a new house – when taking out a home loan your financial institution may require that you have life insurance in place to cover the debt in the event that you pass away. Depending on the loan amount a portion of your life cover will be ceded against the home loan, leaving your dependents underinsured and out of pocket.
Your children – one of the common reasons people take out life insurance is to protect the financial future of their children. When you have a new child or the number of your dependents increases, it is important to ensure that your life insurance is adjusted to accommodate the changes.
Getting a higher paying job – if your financial situation improves, you should update your life cover amount accordingly to ensure your family maintains the same lifestyle should you pass away.
Getting hitched – getting married and starting a family is a commitment that comes with a number of financial responsibilities. Updating your policy cover and including your partner as a beneficiary becomes essential, especially when you are married in community of property.
Your health – if your health condition changes, you may have to consider updating your life cover amount, based on your age and individual circumstances. Furthermore, depending on the nature and severity of the illness you may have to claim from your insurer anyway. This would also give you an opportunity to review your policy and the amount insured.
Have you taken or updated your life policy yet?