Birthdays shouldn’t just come with cake and presents, they should also be a reminder that if you don’t have have life insurance cover in place you will probably be paying much more when you do decide to take out a policy.
If other people depend on your income, or if you have debt that will carry on after your death, getting life insurance is generally a good idea. Because, of course, you don't want to leave your loved ones without money to live on or left to pay your debt.
However, waiting till you are older to get your life insured, could mean you will be paying thousands of rands extra annually, says Steph Bester, ceo of financial services provider, AllLife.
He says that the reason you face higher premiums with each year you delay life insurance is a case of simple maths.
“With every year you age, you are one year closer to the eventual date of passing and once over 40, your chances of developing health challenges increase.
“This means the older you are, the more risk involved in insuring you and, therefore, the more expensive life insurance becomes,” Bester said.
When should people take out a life insurance policy?
According to Bester, there is no right or wrong age but the longer you wait, the more you will pay and the higher the risk, especially if you have a family that depends on your income.
Why should you have life insurance?
Life insurance is a financial gift that you leave your loved ones that will protect them from financial fallout in the event of your death and allow them to continue with the most important things.
How are life insurance premiums calculated?
Different people will have different premiums because a number of factors including age are used to determine your risk and therefore the premium.
Other factors that are taken into account when premiums are calculated include gender, overall health including weight, any pre-existing conditions, does the person smoke, family history and occupation.
What should you consider when planning for life insurance?
There are two things that people should consider before taking a life insurance policy:
- Life stages
Depending on their life stage, a person may require comprehensive insurance, especially if they have children and long-term financial commitments such as home and car loans.
- Disability cover and severe illness cover
If a person takes this cover, then their family is cushioned financially in the event of a disability or severe illness. Disability cover is for insured people who can no longer earn an income due to a temporary, partial or permanent disability. Severe illness cover pays out a single amount when the insured person suffers a severe illness.
IOL Wealth