Life Insurance provides a lump sum payout in the event of your death. What will happen to your children if you pass away? Do you have life insurance to replace your income so your dependants can continue with their schooling, current lifestyle etc? We can show you what is available, and train you how to determine the amount of cover you need.
When you buy life insurance you sign a contract with an insurer, where the insurer agrees to pay out a set amount of money when you pass away. The amount of death cover you need must be based on your dependants’ needs.
You will need to consider:
- How much money you currently have
- The amount of income your dependants will need if you can’t provide for them anymore. We use a factor of 166.84, for easy calculation. If you want to replace an income of R 10 000/pm you will calculate it as follows: income x factor = cover.
R 10 000 x 166.84 = R 1 668 400.
- Dependants’ future needs.
Capital Disability Benefit
Capital Disability provides a lump sum payout in the event of your permanent and total disablement. It provides cover in the event of the life insured’s continuous, total and permanent inability to perform the normal duties of their own or own and reasonable occupation. Remember that when you become disabled you have to equate for additional expenses.
Comprehensive Income Disability
Comprehensive Income Disability Benefit pays you a regular income should you experience a loss of income upon becoming partially or fully disabled. This is normally equal to 65% of your current income.
Dread disease or Trauma cover, provides a lump sum payout in the event of diagnosis of a covered dread disease.
The graph below shows you how much you can save by doing it the FEAD way. The example used was on a male age 37, his needs were life cover, disability and an income protection. His premium was R 789.85/pm, but by implementing the FEAD principles, the premium lowered to R 630.40/pm (Same insurer). If this client saved the difference in the premiums for 20 years at a growth rate of 10% he would have saved an additional amount of R 170 636.97.