Life Cover In South Africa

By Susan Renolds

As a responsible person with a financial obligations and a family, you certainly realize your need for insurance. Your goal is to purchase the right amount of insurance. If you're over insured, you're paying too much. But that is not as dangerous as being underinsured.

A simple formula can help you roughly calculate your life cover needs. Short term needs + long term needs - resources = the amount of cover you need. Use the following steps as a guide to begin your own needs analysis. Keep in mind, this is not an exact science, so use your best judgment when purchasing your policy.

Short-term needs: Begin by adding up all your short-term needs. These are the immediate needs your family will have upon your death, and generally fall into three categories: final expenses, outstanding debt and emergency expenses.

Final expenses include medical expenses incurred as a result of your death, funeral expenses, attorney and executor fees, probate court costs and any outstanding taxes you would owe. Typical outstanding debts include revolving debt such as credit cards, auto loans, and school loans. Include a cash reserve for emergency expenses such as medical emergencies, home repair, etc. Because you can't accurately predict final and emergency expenses, it is best to overestimate this category.

Long-term needs: By using mortgage/rent amount and college Fees you can now calculate your long term obligations.

Operating expenses: Next determine your family's normally budgeted operating expenses. This will include necessities like childcare, groceries, clothing, utilities, entertainment, and transportation for one year. Multiply this figure by the number of years you want your insurance to cover these expenses. Add the totals of these three expense categories together.

After figuring out how much your family needs to earn, you can begin looking for those resources needed. Consider the sum of your available savings, investments, the insurance payout for death benefits if any is offered at work. Also, see if your family qualifies for any government assistance programs.

The list needs to consider only liquid assets, not items like the home or car. If you had to sell these items to meet you expenses, the lifestyle of your family would really change.

The bottom line: Take the income necessary to meet your family's full financial obligations and subtract from it your concrete resources to obtain a guideline for the amount of life insurance cover you will need.

U have to be insured adequately and this analysis should be taken every three years.Adding a new baby will cause you to readjust for childcare. Also college tuition expenses is very high.when you are paying this u should remember the payment because the balance decreases with every payment.

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