There are two vital elements of a financial plan when you have children: a valid Will and adequate insurance cover. If you pass away without a Will your estate will be distributed according to the Intestate Succession Act, 1987. Under these laws, your closest relatives will inherit from you, but they may not necessarily be the people whom you intended to have your assets says Head of Financial Consulting at Standard Bank, Deon Nel.
Follow the step below to ensure that your children are protected:
Buy life insurance
Ensure that the funds are in place to ensure that your child has a good education and to support their basic needs, such as medical cover, food and clothing. The ideal scenario is to have a policy that will pay out about seven to 10 times that of your annual salary. For example, if you earn R20 000 per month, you would need a policy that pays out R2.4 million.
It is important to also make provision for debt settlement, so you should add the total amount of your debt to the policy.
Your financial planner may suggest that you add an investment plan, which may make the policy less affordable. Do not let this put you off; take the pure life cover and you can take out a separate investment policy later. Life cover on its own is relatively inexpensive, especially when you consider the peace of mind it will give you.