Is life insurance simply an upsell?
Northmead resident and financial advisor Hans Myburgh shares invaluable financial advice to help fellow Benonians take control of their financial future.
Let’s Talk Finances – by Hans Myburgh, registered financial advisor and Northmead resident.
Do you ever feel like your financial advisor is simply selling you a product, such as life insurance, in an effort to meet targets?
According to Myburgh, life cover is one of the most misunderstood and oversold financial products.
What is life cover?
Life cover is a policy that pays a lump sum to your loved ones in the event of your death.
This pay-out is meant to settle outstanding debts, cover living costs, while providing your family a financial cushion.
Who needs it?
• A spouse or partner who relies on you financially.
• Children who need continued support.
• Ageing parents or extended family.
• Outstanding debts such as a home loan or business finance.
When is life cover unnecessary?
“If you are single, debt-free and do not have anyone who relies on your income, you likely do not need life cover right now, however, basic funeral cover is advisable,” said Myburgh.
“As you build wealth and your children become financially independent, your need for life cover may reduce.”
Why do people end up over-insured?
Policies are often sold to meet sales targets, not client needs.
As a policy holder, take the time to review your policies in alignment with your ever changing needs.
“If you bond is settled, your kids are grown and a comfortable retirement is guaranteed, it may be advisable to redirect your monthly life cover premium to a tax-free investment,” he said.
“This fund will assist you through life, not just death.”
What should good life cover do?
• Replace your lost income.
• Settle debts and final expenses.
• Provide financial breathing room during a difficult time.
When to review your cover?
You need to review your cover throughout each chapter of your life.
Do not simply buy into life cover if:
• No financial needs analysis is done.
• The cover amount seems excessive.
• You feel pressured.
• You do not understand what the policy entails.
• If you are not given the opportunity to weigh up your options.
“Do you really need life cover? Only you know what the impact would be on your loved ones, if you die,” said Myburg.
“Do not let fear, pressure or a broker make that decision for you. The key is buying into life cover set at the right amount for the right reason.”
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