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How life cover helps you build generational wealth

Protect your assets and give your children the gift of education

12 July 2021
3 minute read

Who doesn’t want a paid-off home loan, enough savings for a good education for your children, and a little more to build your family’s generational wealth? This doesn’t have to be a pipe dream! With some careful financial planning and good budgeting, you can make sure it happens.

Your life cover policy is an important part of creating your family’s wealth because it gives them financial security if you are no longer around to provide for them. Your family can use a pay-out from your life cover policy to create their generational wealth by using the money to pay any debts, such as a home loan, and pay for your children’s education.

Protecting your assets is a must in wealth creation

One of the biggest assets a family has is their home. Your home is your family’s place to live and grow, but it’s also a legacy you can leave them when you pass on.

But what happens if you don’t live as long as you expect to, and pass on before paying off your home loan? Will your family be able to afford the repayments, will they need to downsize to a smaller home, or move in with family and friends?

The best way to protect your home is insurance, which is why a life cover policy is so important. Your family can use the pay-out to pay off your home loan and have both a place to live and an asset that forms part of the family’s wealth.

The gift of education opens the doors to wealth creation

Equally important on your wealth creation journey is giving your family the skills and opportunity they need for future success. We’re talking education here – and we cannot stress how important it is.

Did you know that only 2% of people who are unemployed in South Africa are university graduates? A massive 52% of people who are unemployed don’t have a matric, according to Statistics SA.

Education is a predictor of future earnings – which means that the better your children are educated, the more they are likely to earn in the job market one day.

It takes money, lots of money over many years, to give your children a good education. Making sure this happens if you are no longer around is one of the main reasons people should take out life insurance. Using a life insurance pay-out to pay for education costs is a lasting legacy for your children and can make sure they are able to use their education to build their family’s wealth.

An example: Think of two families – one where the main provider (Dina) has life insurance and another where the provider (Deon) doesn’t. If Dina were sadly to die, her family could use the pay-out from a life insurance policy to pay off a home loan as well as pay for school fees and university costs. However, with no insurance pay-out, Deon’s family might have to downsize homes, move schools, and the children might not complete school or further education.

Deon’s family faces a far tougher time than Dina’s. And while there is no guarantee Dina’s children will be successful and Deon’s won’t, Dina’s children will have a far better head start, and will have already put their first foot on the ladder to generational wealth, thanks to their mother’s careful financial planning.

Start today with a life cover policy

Building your family’s wealth isn’t all about investing and building an empire. It’s also about getting the basics right and protecting the assets you have and giving your children the gift of education. Life insurance is one of the basics – and it can go a long way to ensuring financial stability and future generational wealth for your family.

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