Many South Africans haven’t even considered life insurance, or if they have, they have some concerns. There are a lot of preconceived ideas about life insurance out there, and the good news is that most of them aren’t true! Here are some life insurance myths that we challenge you to investigate. You might just be surprised!
I’m young/single so I don’t need life insurance
There is some merit to this thinking, but you need to consider whether you might have other reasons for life insurance. You might not be married or have kids, but if you’re still paying off a car, house or any other big purchase, your life insurance will pay out these debts rather than leaving family members responsible.
Another thing to consider is your funeral costs. If something were to happen, would your family struggle to afford a funeral without suffering financially? If so, why put your family through extra suffering at an already traumatic time? MiWayLife’s 4-in-1 policy will pay out a portion of your life cover immediately to assist with the costs of holding a dignified funeral. The remainder will then be paid out later to cover your outstanding debts and so on.
You should also consider life insurance if you strongly believe in a charitable cause who you want to leave a large sum to eventually. You can list a charity or similar as your beneficiary should anything happen to you.
I’m covered by my work – that’s enough
While this is a great benefit to have, the payout is normally fairly low. It might be two or three times your annual salary, which seems like a lot. However, you actually need more like ten to twenty times your salary, especially if you have dependants.
If your base salary is low (for instance, you may work on a largely commission-based salary) then remember that the corresponding payout will also be low.
Finally, be aware that while your workplace covers you, they will stop coverage when you leave. If you lose or leave your job, you could be left without any life cover, which puts you and your family at risk for financial problems should something happen. A personal life policy allows you to avoid these issues.
Only funeral cover is necessary
Particularly in South Africa, funeral cover is very popular. When you realise that the average funeral costs around R100 000, you can see why. Funeral cover is definitely a necessary expense and shouldn’t be foregone, but there are other important aspects of life cover. Life cover can pay for your children’s education, for your house or for any other expenses – our policy means that you still get extensive funeral cover for you and your extended family, but you also get life cover which can be used for expenses which may appear years after your funeral.
Life insurance is too expensive
The cost of life insurance is vastly overestimated. With MiWayLife, you could be receive R500 000 life cover for as little as R149 per month – or R5 a day. What else could you buy with R5 that would give you and your family peace of mind and financial security? By cutting back on takeout, daily coffees, or bought lunches at the office you can easily afford to take out a life policy.
Life choices don’t affect premiums
This is not true – you will often be rewarded for positive lifestyle choices like not smoking, exercising often, and having regular check-ups.
Only the breadwinner needs life insurance
You might think that your family would be financially secure even if something were to happen to you. However, there are likely many costs you hadn’t thought of. Perhaps you do chores and look after the children? Would your partner be able to afford cleaning and laundry services along with childcare and/or a driver? Would your partner be able to pay outright for your funeral?
I should invest my money rather than buy life insurance
Life insurance and investment serve two very different purposes. Life insurance is designed to give you peace of mind and protect against the unexpected, where investment aims to grow savings and wealth over a longer time period.
Because life insurance is fairly inexpensive, it should form part of a sensible retirement or savings plan. The benefit of life insurance is that it is guaranteed to pay out at whatever time it is needed, be that tomorrow or in 20 years’ time. There are no guarantees with investment. Don’t get us wrong – you should be investing, but you need to do it smartly and not use this as an alternative to life cover. You cannot, for instance, ensure that you’ll reap benefits at whatever time you happen to need them most.
If I have health issues, I can’t get life insurance anyway
Generally, you will be able to buy life insurance unless you have very severe health issues or a terminal illness. Your cover will cost more, but conditions such diabetes, asthma, high blood pressure or cholesterol and others should not preclude you from taking out a life policy. Sometimes even patients with HIV or cancer can get life insurance.