The thought of losing your life partner can be something that is not only life-changing, but also has a financial impact that can be hard to recover from if you do not have a financial safety net. Life is unpredictable, which is why both you and your partner must have a life cover in place. Here is what you need to know.
Protection for all types of situations
South Africa is made of eclectic families. Whether you are married, living together or in a long-term relationship, life insurance is there to cover you. If you are the breadwinner, a stay at home mom or someone who has other people that rely on you for financial support, having this type of safety net can ensure that they are taken care of even when you have died.
Having separate policies can be beneficial to both people since we do not know who will pass away first. With 4 out of 10 marriages in South Africa ending in divorce before the 10th anniversary, having your own policy can ensure that you are covered no matter what happens.
Each person brings something when it comes to creating stability in your relationship. This could be financial or offering services of love that cannot be easily replaced. Death comes to disrupt this and without financially planning ahead, it can deliver a devastating blow. While life insurance will never replace a loved one it is can offer peace of mind of not having to face the financial responsibility of maintaining your existing lifestyle alone.
Insurable interest when taking out a policy for someone
If you are taking out cover for your husband, for instance, the husband is the ‘life assured.' There has to be a sound reason for covering the life assured, so you have to demonstrate that should the life assured pass away, you would suffer financial consequences or losses.
Other common instances include people taking out life cover on business partners, ex-partners who pay child maintenance, or even key employees from time to time.
Just being close family members does not entitle you to take out life cover on another person, however. The key is still that you have an insurable interest and would suffer a financial loss or hardship if the life assured passed away. For instance, if your parents or grandparents no longer support you financially in any way, you would not be able to take out life cover on them.
It's also worth noting that if you pay for life cover for a loved one, the life assured still has the choice of who the beneficiaries are - which means that they could theoretically choose not to have you as a beneficiary if they wanted too.
Things to discuss before taking out a policy
Having an open and honest conversation about this is crucial. Before you start searching for a policy, it is important to know who will be paying for each policy and how much you can afford. It is always better to take out life cover sooner than later, while it is still affordable.