Get life and funeral cover today

basketBuy online

Why no financial plan is complete without life insurance

4 January 2024
5 minute read

Life insurance policies play an important role in financial planning, protecting your family and dependants by giving them financial security for when you are no longer around to provide for them. Plus, valid life insurance claims pay out far quicker than inheritances from estates, ensuring your loved ones have funds available, post the funeral, when they need them most!

Importance of life insurance in financial planning

A financial plan is a comprehensive plan for your money, for your life and death. It details how you spend money that you earn or inherit, how you protect your money, your assets and your family from financial distress, and how, why and when you save and invest. Finally, your financial plan details what happens to your money and wealth, and debts, after you pass away. The most important role of life insurance in financial planning is to protect your wealth and ensure your loved ones have funds available after your passing, while another key role is to ensure your debts are paid and don’t place a financial burden on your family.

young adult male pointing up to his left or the viewers right

Looking for a life quote?
We'll call you!

Please type in your name
Please type in a valid SA number

#1 Role of life insurance policies in financial planning: protect your family

You protect your assets such as your home and car by taking out household and car insurance. Your income is also an important asset to your family – without it, your family could struggle financially. This is why life insurance is so important in financial planning: you can safeguard the income your family depends on by taking out life insurance that pays a lump sum to your beneficiary or beneficiaries on your death, so your loved ones can continue paying their living costs. The pay-out is tax free, so your family will receive a lump sum amount for a valid claim without any other deductions.

#2 Role of life insurance policies in financial planning: pay your debts on death

Your loved ones don’t inherit your debts, but any money you owe when you pass will have to be paid from your estate. This means that the inheritance your loved ones receive can be less than expected as debts are paid before any money is paid as an inheritance. In addition, if you are married in community of property your spouse will be liable for all your debts in full on your death. Having enough life insurance to cover any unsecured debts, as well as any tax obligations on death such as estate duty, ensures your debts don’t reduce your loved ones’ inheritances. Unsecured debts are those such as personal loans, and debts where there is no credit life insurance that will pay an outstanding debt on death.

#3 Role of life insurance policies in financial planning: ensure your loved ones have cash available after the funeral

Estates can take a long time to wind up. Months, often years pass before inheritances are paid. In the interim, your family will need to pay living expenses. The quickest way to ensure your family has cash on hand while waiting for an inheritance is life insurance, because it is paid directly to the beneficiary or beneficiaries and does not have to be paid into your estate. Within a few weeks, often sooner, valid claims are paid, and your loved ones have financial security immediately after your passing.

Many financial plans ensure life insurance is in place just for this purpose – to ensure the family has access to funds soon after a loved one passes.

Top tip: Check your life insurance policy today to make sure you have nominated a beneficiary!

1Life Insurance – tailored cover for all South Africans

Because you and your family have your own unique financial goals, your life cover needs to be tailored just for you! Life insurance is not a one size fits all, it should and can suit your needs, your financial plan, and your budget. It must be convenient and easy to take out, manage and claim, and be affordable. 1Life Insurance offers a range of different products to suit your needs. Cover options start at R300 000 up to R10 million and you have options to increase cover without extra underwriting at various times, such as when you marry. Partnering with an innovative insurer that offers tailored policies ensures your life insurance can be used in your financial plan where it is most needed.

Financial planning within the insurance context

A financial plan missing life insurance is incomplete. Without life cover, your family and loved ones may face financial stress when you pass. Your financial plan will also include your investments, such as unit trust funds, shares, even properties you own and earn an income from. These are important to you and your family and can build wealth your family can benefit from for generations to come.

While each element of your financial plan is important, taken together they give you and your loved ones the best financial future possible.

Know your life insurance policy and make sure it meets your needs

Life insurance policies in South Africa have helped many families continue meeting their financial obligations when an income earner passes. Valid claims paid, where all the policy terms and conditions have been met, total billions of rands and have ensured many family's’ financial security. Why not review your financial plan and your insurance needs today? 1Life’s skilled consultants are waiting to help you protect your family’s future!

We answer your questions about our products and services! 

What role does life insurance play in paying off debts after death?

Life insurance can be a life line in covering debts post a death. If you pass with debts, your estate will cover what you owe first before your family gets access to anything. This can also take a long time to wrap up. As life insurance does not form part of your estate, your family can have access to funds sooner and if there is a shortfall from the estate, use the life insurance payout to cover it.

What are unsecured debts, and how does life insurance help cover them?

Unsecured debts are those such as personal loans, and debts where there is no credit life insurance that will pay an outstanding debt on death. If you have this kind of debt, then the life insurance payout can be used to settle the debt owed.

What are the consequences of not having life insurance in a financial plan?

The consequences of not having life insurance in your financial plan is that your wealth might not be protected and there will be a considerable delay in your loved ones having access to any funds as your estate is wrapped up after your passing. While another key consideration is that your debts such as any loans, might not be covered and so you place an unecessary financial burden on your family.

How does life insurance complement other aspects of financial planning, such as investments?

Life cover is there to protect your loved ones financially when you pass away, while investments serve to grow your wealth over time and focus on a long-term financial goals such as retirement savings.

Enter your name and contact number and one of our consultants will call you back:

Please type in your name
Please type in a valid SA number
Please select what your query relates to
Call me back