There comes a point in time where we all want to protect the people who have raised us and protected us. As we see our parents age, we want to offer them all the support they need.
You can take out life cover on their behalf to protect their financial futures or include them as a beneficiary. However, there are a few things to keep in mind when looking for cover for your parents. Here is what you need to know to make sure that all your bases are covered.
When is the right time to buy cover for your parents?
The best time for your parents to take out life cover was when they were young, but the second-best time is now. The reality is that the older they become, the more likely it is for them to be at risk of illnesses or possibly injuring themselves. Not being financially prepared can take a huge chunk out of any budget or savings that are in place. Therefore, thinking ahead by taking out cover for them as soon as possible is one of the best things you could do. Keep in mind that life insurance does have an age restriction that doesn't cover people older than 65 years.
What are the benefits?
Retiring is one of the biggest phases anyone can reach in their life. It also means that your source of income is halted, unless if you decide to run a business on the side. However, not many South Africans can retire comfortably, with 6 out of 100 people only being able to retire. According to a survey by Old Mutual, 75% of South Africans are planning on or currently supporting their parents. Life cover can cover things such as:
Daily living expenses
Adapting a house to support someone's medical condition
Paying off any debt
If you are someone who is planning on taking care of your parents, having a policy in place can ensure that your parents will be taken care of no matter what. It is advisable that your parents have their own policy in their name and that people who are planning on taking care of their parents list them as a beneficiary to make sure that all your bases are covered.
How much cover is enough cover?
How much will be enough to sustain your parent's daily living expenses? What will it cost to take care of them should they be diagnosed with a terminal illness? Who will take care of the debt that they may have accumulated? These are just some of the questions that need to be answered when looking to take out life cover for your parents. Looking at their current spending per annum can give you a picture of just how much cover they need. You can also use our life insurance calculator to find out how much cover is enough to cover for you and your loved ones.
Who will be paying for the policy?
Whether you are planning on taking out a policy and adding your parents as beneficiaries or having them take out a policy under their name and paying for it, is a crucial decision to make. Keep in mind that a policy remains active so long as you are up to date with your premiums. Defaulting on your premiums can cause the policy to lapse which will eventually be cancelled - a devastating blow for when you need it the most. Make sure to ask your insurer what the annual increase will be to see if you will be able to afford it in the long run.
Things to remember before you sign
The guidelines that have been set out in the exclusions of your policy will still apply to your parents. Therefore, go through these carefully to understand them. Going through these with your parents can also give everyone a clearer understanding of what can cause a claim to be denied by an insurer. Doing this can help you avoid any frustration and confusion when it comes to the claims stage.