How to assess your life insurance needs

January 2006

No one wants to put a monetary value on their life. Life is priceless and too valuable for that. But life insurance is a necessity, not only for peace of mind, but as a means of protecting the financial security of your family, and making sure they are safeguarded in the untimely event of your death. According to Lenerd Louw, CEO of 1Lifedirect, South Africa's first truly direct life insurer: The task of choosing a life insurance policy can be confusing and somewhat daunting. There are many options to consider, many policies to decipher, and at the end of the day, every family has different needs and requirements."

So how do you go about choosing a life insurance policy that is right for you and your family? 1Lifedirect offers the following tips on how to assess your life insurance needs:

Do I need a life insurance?
If you have people who depend on you, you need life insurance. If you have debt, like a house that is bonded to a bank or vehicle repayments, you need life insurance.
Life insurance helps protect your dependents and fulfill the obligations that you leave behind.

Do I really need to use a broker or can I go the direct route?
When choosing whether to use a broker or go the direct route, it is important to keep in mind that brokers earn ongoing commission, receiving monthly administration fee payments as well. These payments are made to the broker for the lifetime of the policy. Because the direct life insurer does not incur these costs, the savings can be passed on to the client. With 1Lifedirect, for example, you can save up to 22.5% on broker commissions and what's more, 1Lifedirect customers will be covered within 20 minutes without needing a medical examination. Both insurance options offer benefits, but at the end of the day, it is up to the consumers to make the decision on which route they choose, based on what suits their lifestyle needs.

How much life insurance do I need?
Everyone's answer to that question is different as your personal situation is unique. Many factors influence the amount of life insurance you need, including: marital status, number of children, outstanding debts and how much you can afford to pay for premiums. A 1Lifedirect relationship manager will be able to guide you through this process and based on the factors above, will be able to recommend the right amount of cover and the best price. For example, with 1Lifedirect, a 30 year old female could get R1-million worth of cover for as little as R89 per month*.

What are the difference between Pure Life Cover and Credit Life Cover?
Usually there are two types of life insurance to choose from – Pure Life and Credit Life. With Pure Life Cover, the client's beneficiaries will receive the value of the life insurance policy after the client's death. Credit Life Cover will take care of any outstanding debt the client may leave behind, such as a bond or vehicle finance agreement. Depending on your personal needs, you would be able to purchase these options either together, or on a stand alone basis.

"Life insurance does not have to be a complicated exercise and can in fact be successfully arranged and implemented over the phone or internet. At 1Lifedirect, we believe that life is for living and shouldn't be spent hassling with insurance, and that is why we have chosen to make the process of acquiring life insurance as simple and straightforward as possible, ultimately saving consumers money and valuable time", concludes Louw.

*Terms and Conditions Apply