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Life cover shouldn’t feel like a grudge purchase. When advisers translate a lump sum benefit into real outcomes for a family, the value becomes much clearer. Using a R2 million pay-out as an example, we explore how life cover could settle debts, replace income, fund education and create several advice opportunities along the way.
A home loan and car finance - paid off
Life cover can be used to pay off debts, such as a home or personal loan, leaving a family debt- free. If debts are paid, a family’s expenses can reduce dramatically as there are no capital or interest payments to make.
As an example, consider a family with a joint income of R60 000 a month, with each partner earning R30 000. Pre-death of a partner, the budget includes home loan payments, vehicle finance and credit card payments of R20 000 a month. On one income of R30 000 a month this is unsustainable. If these debts are paid using insurance, the budget is more manageable.
Advice opportunity: when looking at how much cover clients need, you can help them analyse their budgets and balance sheets to work out which debts can be paid on death using life cover. You can also show how a budget would look when these debts are paid. As debts change, budgets and cover should be reviewed regularly.
Estate costs and taxes taken care of
Yet again, 2026 has seen reports of slow administration at the Masters’ offices, which means payment from even the simplest estate takes at least a few months. Valid life cover claims just don’t take as long to pay. When a named beneficiary receives a life cover pay-out, families have funds for death and living expenses while the estate is being wound up.
In addition, funds from a life cover policy can be used to pay executor fees as well as any taxes such as estate duty and capital gains tax on investments. Using life cover means investments don’t need to be liquidated, or worse – assets such as a family home sold.
Advice opportunity: a will is a start but for a smooth transfer of assets and to minimise costs and taxes an estate plan is a must. Help your clients draw up their personalised estate plan that includes life cover to pay for expenses and taxes.
Retirement income for a spouse or partner
Without careful planning a spouse or partner can be left with reduced income, sometimes no income, when the member of a retirement fund passes away. This is devastating at a later age when employment opportunities are limited. Life cover may not seem a natural retirement product but it can make a big financial difference to a surviving spouse.
Advice opportunity: help your clients decide which retirement income/annuity options are suitable so that one spouse or partner is not left destitute on the death of the other. If retirement products are in place and cannot be changed, recommend life cover that will provide adequate income for a surviving spouse or partner. When a valid claim is paid, advise on decisions such as an annuity or income-earning investments.
An income of R22 000 for 10 years
Life cover can be used to replace income when an income earner passes away. Consider a life cover policy of R2 million for a life assured who earned R30 000 a month. If the life assured dies, the pay-out could be invested and earn a return of say, 6%, giving the family an income each month of around R22 000 for 10 years. For a 60-year-old, a lifetime income of around R14 000 could be generated.
Advice opportunity: at purchase, advisers can accurately assess how much cover a client’s beneficiaries need to maintain their standard of living. Using a monthly income amount, advisers can work out what capital amount is needed to generate this and make an appropriate recommendation. Advisers can also help the beneficiaries set up investments and annuities to generate future income when a valid claim is paid.
School fees and a university degree
R2 million life cover could mean the payment of school fees and/or university fees. Taking an example of Fourways High School, where 2026 annual school fees are around R60 000 a year, a pay-out could cover fees for four years for two learners, at a cost of around R500 000, leaving around R1.5 million for tertiary education. A three-year BCom degree at Wits University is around R80 000 a year, which costs another say R500 000. School and degree completed on a life cover pay-out with some to spare – maybe even a car for the children.
Advice opportunity: help clients put a rand value to education expenses and integrate into the life cover plan and sum assured. On pay-out, advise beneficiaries on how the amount can be invested according to needs and time horizon.
Spending the life cover pay-out and the many advice opportunities
If there is no specific planned ahead use for life cover, advisers can help clients’ beneficiaries spend the pay-out to ensure financial independence. Even the most savvy client can rapidly spend a few million rands, leaving very little to grow wealth. Advisers can help clients set up the spending, saving and investment plan when a claim is paid so that they can grow wealth and achieve lasting financial independence.
Life cover offers opportunities for a lifetime of advice
Life cover is boring only some of the time, and what it can do is the stuff dreams are made of! Show your clients how it can help them with financial independence in rands and cents to help them embrace life cover and make the right choice upfront and on pay-out.