In the insurance industry – all policies and advice are structured around what we call “The 5 problems in life”. This series of articles will unpack what these problems are and how you can protect yourself from them so that life is something that you live and not something that happens to you. In part 1, we will look at how you should prepare for dying too soon.
Life is full of uncertainties and the role of insurance is to set aside some money now to make sure you have adequate funds available for any issues that arise later in life. Do you know exactly when you will die? Will you be able to support the lifestyle you enjoy now after you retire without running out of money? Your ability to earn an income is your biggest asset – have you protected it? Medical expenses at private hospitals can leave you with a massive bill to settle and often your medical aid does not cover the full costs – do you have Gap cover? How can you reduce your tax contribution and how can you make provisions for the effects of inflation? These are the questions that insurance seeks to solve.
Dying too soon – have you found out when you will die?
It is an unfortunate fact, but at some point, we will pass away. This is something that we do not want to think about, and we don’t know when it will happen – but it is something that we need to make provisions for. What will happen to your loved ones if you were to die tomorrow? Are all your documents, affairs and other items in order? Will your surviving dependents have enough to take care of the debts and liabilities that could be left behind? Will they still be able to enjoy the quality of life that that they are used to? These are tough questions; but they need to be answered so that your estate can be left secured when you die.
- Firstly, make sure you have an up-to-date Will and your documents in order.
A Will stipulates how you want your assets and other belongings to be distributed to surviving family. It also specifies guardianship of your children, who will look after your pets and can save your family the uncomfortable decisions of distributing your estate among your heirs. It is also important to be sure you keep all your documents in order and stored somewhere safe. Your beneficiaries might need to have access to your retirement policies, banking accounts or any investment funds. Keeping your documents in order helps make this a smoother process and it can free up some cash to take care of any debts or funeral related expenses.
Among your documents – you should also keep a list of all your online accounts and passwords. This is especially important if you have online financial accounts because imagine the devastation of knowing that your recently deceased loved one did make financial provisions for you – however you are unable to access it because you have no login details.
- Next, you should consider life insurance.
We have all had a call at some point in our lives from someone offering us life insurance. However – ensuring that your beneficiaries are left with a decent sum of money when you die might be the most responsible option available to you – especially if you have dependents that rely on you for living expenses. Life insurance can also help settle any debts left behind even if you do not need to make provisions for surviving family members like adult children with their own income.
Do not let thoughts like – ‘Oh, we have a large enough savings’ or ‘My children are grown up and have stable incomes’ impact your decision. These are not true because there are still numerous ways in which life insurance can help your surviving family upon your death.
- Consult a Financial Advisor or Estate Planner
Even if you think you have covered yourself adequately and put proper provisions in place – it would not hurt to have a financial professional have a look at the cover you have in place and identify any shortfalls you might be facing. Even if you are not looking at appointing an advisor to look after all your policies – it is still advisable for you to review them regularly and having a Financial Advisor present to help you may alleviate some of the stress that estate planning can cause.
Preparing for death is a difficult thing to do and so is confronting your mortality. However, answering these tough questions and making sure you make sufficient provisions is a responsible choice and will remove that stress from your beneficiaries when you die.
