Here’s how you can combine the new two-pot system with life insurance and funeral cover to create a holistic financial plan.
South Africa's new two-pot retirement system has everyone talking but it also presents a great opportunity to optimise your financial planning. By combining the new system with life insurance and a funeral policy, you can create a comprehensive strategy that caters to your retirement needs and safeguards your family's financial future.
Understanding the two-pot system
If you haven’t read up on the two-pot system just yet, here’s the basic run down.
In short, it divides your retirement contributions into two parts. The first is a savings pot. One-third of your contributions will be allocated to this pot, which you can access before the age of retirement in case of emergencies.
The second pot is the retirement pot. The remaining two-thirds of your contributions are put in this pot and preserved until your retirement, ensuring a steady income stream during your golden years.
The thinking behind the new plan is to address a problem many people encountered in the past – cashing out their full retirement savings when changing jobs and then paying for it by struggling in their later years when they’re no longer working.
Integrating life insurance into your financial plan
Life insurance can play a very important role in protecting your family's financial future. By purchasing a life insurance policy, you can provide a lump sum payment to your beneficiaries in the event of your passing. This money can be used to cover outstanding debts, fund your children's education or simply ensure your loved ones have the access to whatever they would need if you weren’t around to provide it yourself. Obviously, it’s not a retirement fund as you’ll have passed when it pays out, but it’s a great way to provide financial security for your family.
Remember, nobody knows what life has in store. If you had to pass away before you’d created enough wealth to protect your family or fill up those two retirement pots, having a life insurance policy could be your family’s saving grace as the cover amount can be as little or as much as you need it to be from the moment you start paying your premium. You don’t have to wait years to build up to it.
Funeral cover is an essential purchase
If you have life insurance, you might think you don’t need funeral cover, but don’t underestimate the cost of a funeral. In South Africa, these can range from R10,000 to over R100,000, making it a significant financial burden for families. By investing in a funeral policy, you can ensure that your loved ones are not left struggling to cover these expenses during an already difficult time. They also won’t have to dip you’re your life insurance pay out or estate to fund a dignified farewell.
Putting it all together
Combining the two-pot retirement system with life insurance and funeral cover creates a financial plan that provides immediate as well as long-term financial security – but why pay two premiums for the latter?
When you buy life insurance from MiWayLife, you get to reap the benefits of our 4-in-1 policy – all for just one low monthly premium. Every policy includes comprehensive life insurance, a terminal illness benefit, accelerated funeral cover PLUS funeral cover for your spouse as well as your wider family members that can all be covered as additional insured lives on your policy.
Because our funeral benefit is accelerated, it pays out within 48 hours of an approved claim. The benefit amount is set at 10% of the total available life cover and capped at R50 000.
The bottom line
South Africa's new two-pot retirement system, combined with life insurance and funeral cover, can be a powerful combination if you’re looking for a comprehensive financial plan. Why not get a quick online quote from MiWayLife today?
Did you know:
You can now take out life cover with us online in a few simple steps. No calls and no agents! Make sure to take care of those you love today by buying MiWayLife cover online.
