How to insure your life

2012-03-24 08:22

This month we received many queries about buying houses and cars. This could be a good sign that our readers are feeling more confident about their futures and are prepared to make financial commitments. It is important when buying a house or car that you ensure you can afford it and also take into consideration the additional costs like insurances, rates and levies.

Joseph writes:

I’m in the process of buying a house worth R300 000. I’m looking for a life and disability cover.

The policy should also be an investment for ten years.

Maya replies:

The older type of policies used to include life cover as well as investment but today insurance is sold separately from investments.

What you would need to do is take out a life insurance product for death and disability and then open a separate investment account like a unit trust or exchange traded fund.

I recommend you receive a few quotes on life and disability cover so you can compare what is best for your situation. Online insurers tend to be less expensive as there is no adviser involved but if you feel that you need advice then speak to a broker.

In terms of online insurance there is 1LifeDirect and Frank.net as well as FNB’s online insurance offering.
FNB Life Cover was recently introduced by FNB and is only available to existing clients and is available through the FNB website.

Because there is no broker and no marketing, the costs have been kept really low so it may be a very compelling offer.

There are a few factors that will affect the premium you pay. Managing director of 1Lifedirect, Laurence Hillman says this includes factors such as your medical circumstances, your gender, income, education, age, occupation and smoker status which are taken into account to calculate your monthly premium.

Hillman says for example, a 30-year-old female who is a non-smoker could pay R97.74 per month for life insurance while a 30-year-old female who smokes could pay R125.73 per month.

A 30 year-old male who doesn’t smoke could pay R119.80 per month while a 30-year old male who does could pay R158.32 per month.

“Remember that you do not have to take out life cover with the bank issuing your bond.

“Shopping around could even save you money,” says Hillman who adds that you should make sure you nominate your policy beneficiary so that if your cover amount is greater than your bond amount, your beneficiaries will get the difference.

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