By Edwin Theron
We all know that insurance policies are far from the most thrilling topic in the world, but it’s vitally important to select the right products and make sure they’re perfectly suited to your needs.
Nobody wants to end up with less than they bargained for, or worse, fall for a scam.
It's totally normal to be curious and cautious with your hard-earned cash. Just like you would research and compare different laptops before buying one, you want to do your homework on life insurance policies, too.
Ask about the coverage amount, premium payments, and policy duration, and don't forget to find out about the insurance company's reputation and financial stability.
So, before you jump into anything, ask your potential life insurer these six key questions:
What do I need cover for?
When you're considering getting insurance coverage, you need to understand what risks you want to protect against. For example, you might need cover for your income, your health, your home, or your life.
Each type of policy will provide benefits for specific events or risks, so it's important to choose one that fits your needs.
How much coverage do I need?
The amount of coverage you need will depend on your current financial situation and future needs. For example, if you have dependants who rely on your income, you may need more life insurance coverage than someone who is single and has no dependants.
Consider your current debts, monthly expenses, and any future financial goals you have, such as funding your child's education or buying a home. Insurers sometimes offer calculators and tools that can help you to determine this.
Do I have sufficient insurance?
Under-insurance can happen when you don’t have sufficient insurance relative to your needs. There is a significant insurance gap in South Africa, with many people not having sufficient insurance, and often, it is because they are simply unaware that it's not enough.
It's important to regularly review your policies and adjust your coverage as your needs change.
Can I afford the monthly premiums and how will these change?
Insurance premiums can be a significant expense, so it's important to make sure they fit within your budget. If you can't afford the premiums, you may risk losing your coverage and having your policy lapse.
Make sure you understand how premiums will change over time and the consequences of missed payments. Some premiums are set to remain level for the duration of the policy, while others increase annually.
A policy that starts out being the cheapest won’t necessarily always be the cheapest option over the duration of the cover.
Who are my beneficiaries, and how can they claim when the time comes?
Your beneficiaries are the people who will receive the benefits of your insurance policy when you pass away. Make sure you understand who your beneficiaries are and how they can make a claim when the time comes.
Keep your policy documents in a safe place, and inform your beneficiaries of the policy and how to access it.
Is this the right product, or is there something better out there?
When comparing insurance products, it's important to understand the differences between them and choose the one that best fits your needs. For example, funeral cover and life insurance both pay out on death, but life cover is normally significantly cheaper than funeral cover.
Not everyone qualifies to take out cover, so you need to consider what risks you want to protect against. Do your research, compare policies, and consult with a financial advisor if necessary.
Lastly, is this a legitimate business or a scam? Unfortunately, there are scams out there, so it's important to do your due diligence and ensure you're dealing with a reputable company.
Before talking to a life insurance agent, learn about the types of policies available so you can make an informed decision. Remember, the best policy is the one that meets your needs and your beneficiaries' needs when you pass away. Take some time to do your research and make an informed decision.
Bottom line: don't be afraid to ask some questions, and make sure you understand what you're getting into. Your future self will thank you.
Edwin Theron, CEO, Sanlam Indie.
*The views expressed here are not necessarily those of IOL or of title sites.
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