Did you know you can choose to increase your cover amount on your life insurance policy? Whilst this means that you can choose to have your cover amount changed from R500,000 to R1 million or more there are a few things to consider before doing so.
It depends on your insurer
When taking out a life insurance policy an insurer will quote a cover amount for you. This amount is quoted to fit your needs and also what will be affordable for you. Due to the Treating Costumers Fairly (T.C.F Act) that is geared towards protecting your rights, insurers cannot give you a policy that is not financially suitable for you.
Choosing to increase your life cover amount is a decision you will have to make and is limited by how much cover an insurer offers. For example, MiWayLife offers life cover policies that start at R500,000 up to R5 million which means the increase you choose will have to be within this range. If you are looking for a higher amount, you will need to seek another insurer.
What happens when you increase the cover amount?
It is important to know that increasing the cover amount will affect your premiums. This is due to the increased amount along with the level of risk that an insurer takes on. Therefore, assess if you will be able to afford the increased premium.
You will also need to factor in the annual increase that is placed on most policies by insurers to see if you will be able to maintain your payments in the long term. The last thing you want is having to close your policy after having it for so long.
Do you have enough life insurance?
Increasing your life insurance policy cover amount can be beneficial if you have beneficiaries that you want to financially protect. Whether you are still trying to find the right policy or looking to increase the amount, it is vital to know if you have enough life cover.
There is such a thing as being underinsured which can leave your loved ones financially exposed because your cover amount was too low to cover their financial needs. Using a life insurance calculator, which is a free tool, can let you see if the amount you currently have or are planning on taking out will be enough to provide a financial safety net. You can also get an obligation-free quote to help you make a better decision when it comes to life insurance.
