Your ability to earn an income is your greatest financial asset and it is followed by protecting your family’s financial security when you are no longer there.
Income Protection
Your future salary is one of your biggest assets because if you are unable to work and cannot earn an income you won’t be able to provide for yourself or your family. It is therefore critical to ensure that you will still receive an income in case you become ill, disabled or unable to work. Many people believe ‘it won’t happen to me’, ‘I’m too young’ or ‘I’ll be able to handle it’ but the risk of illness or disability can seriously impact your ability to earn an income. According to research many South Africans are underinsured in this department and believe they can leave it for later. A life-changing event such as sickness or disability that can influence your ability to work and earn an income can have serious repercussions. It could mean that you become financially dependent on someone else and lose everything you have. Income protection ensures that you will still get a monthly pay-out if you aren’t able to work anymore. You can also choose to make provision for a lump sum payment. If you decide to put income protection off for too long, it could lead to higher premiums in the future for the same level of cover or even becoming uninsurable in the market.
Life Insurance
Life insurance provides financial protection for those left behind in the event of death. It can be used to ensure that our loved ones have a roof over their head or that our children get the education they deserve. Life cover can also ensure that your family is not left behind with your debt, funeral and executors’ costs and other unforeseen expenses. It is crucial to review your life insurance policy when changes happen in your life, for example when you get married or have children. Ensure that your spouse and children are added to your policy and make sure that your family will get the money they need to maintain their standard of living when you are gone. Lifestyle changes also happen which could mean a more expensive house and an extra car so ensure your cover stays relevant to protect you and your family against any unforeseen events. A financial advisor can assist you to determine how much life cover you need and what it will cost.
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