For someone looking to cover their bases, calculating the cost of life cover is crucial.
Knowing how much cover is enough for you and your loved ones can be achieved through using a life insurance calculator, but there are a few things to consider before you cross your 'T's and dot your 'I's. Here is what you need to know.
Maintaining a life you know
Think about a moment where you or your loved ones are faced with a life-changing moment such as being diagnosed with a terminal illness or faced with death. Will your loved ones be able to carry on life as they knew it without facing any financial strain?
Suddenly being exposed financially can be the final blow for many families, which is why most people choose to have life cover to provide a safety net. Therefore, having enough cover to make sure that all your bases are covered starts with knowing how much cover will be enough. On average, South Africans need at least R1.6 million worth of insurance. You can use our life insurance calculator to find out the right amount for you.
Why do premiums differ
A frequently asked question is why do premiums differ from person to person. Life cover is not a 'one size fit's all solution' but is tailored to meet your needs. Your health, lifestyle, and financial needs will not be the same as another person who is the same gender or age as you. Therefore, insurers use what is known as the underwriting process which is a process where you are asked questions to find a cover that will be best suited to you.
What are things that affect your premiums?
There are a few things that insurers look at to assess whether you will be able to receive cover or if your cover will be slightly higher due to the level of risk you pose. It is possible to have control over some aspects such as your health by becoming healthy or changing your lifestyle choices to receive a lower premium. Other things that affect your premiums are:
Cover amount. Upgrading your cover amount from R500,000 to R5 million will affect your premiums. The premium tends to increase with the cover amount.
Your habits. Insurers look at things that can pose a risk to your life. Habits such as smoking or participating in certain hobbies can cause your premiums to increase. In some cases, you could be denied cover based on the level of risk your habits pose.
Health. A golden rule is to take out life cover when you are still young and healthy. You can still get cover even if you have an existing medical condition, but it could impact your premiums.
Gender. Insurers look at scientifically backed data as to which genders tend to develop life-threatening illnesses and tend to be a more at-risk group, which in turn affects premiums.
What to keep in mind when taking out a policy?
Understanding what you want to have covered can make you assess your life insurance needs better and also look for ways to make it affordable. Take into consideration financial needs you and your loved ones will want to have covered, even when you are no longer around. You can also get an obligation-free quote where you can have one of our consultants walk you through the process of finding the best solution for you and your loved ones.
