your guide to life insurance

JustMoney has partnered with a specialist life insurance to help our clients find the best cover on the market. Insurance Busters covers the entire life insurance market and with their qualified consultants will find you the best available life insurance product for your needs.

Nobody likes to think about Life Insurance, as it is planning for when you are not here, if you have a debilitating accident, or if you are simply no longer able to work and provide for your family. However, it is essential to take your head out of the sand and think about the impact of your death on your loved ones.

Why should I take out Life Insurance?

Accidents happen every day, we are all exposed to them and exposed to the financial loss that they incur. It is up to you as an individual to decide how to handle the risks you are exposed to.

• You can try to avoid risks by not exposing yourself to activities that expose you to risk – like mountain climbing or riding a motorbike.
• You can reduce the risk of loss of life by installing better security in your home.
• You can accept the risk and set aside funds every month in case the eventuality occurs.
• Or, you can simply transfer the risk by purchasing life insurance. Protection from financial loss is provided by a life insurance company in return for the contribution you pay for the cover.

How does Life Insurance work?

Life Insurance works on the principal that a group of people have the same concern about a potential loss. However, since it is unlikely that each individual will experience the same loss at the same time, each person pays a sum of money (the life insurance contribution) so that if the loss occurs, it will be covered. Because only a percentage of the group will actually experience the loss, sufficient funds will always be available to cover the losses when they occur.

• The amount you choose to insure for
• Your current health
• Age
• Sex
• If you are a smoker or not
• Occupation
• Qualifications
• Current and future earnings
• Annual benefits increase, and annual contribution increase
• Income escalation
• Waiting period

The income bands are renewed annually and rating categories are reassessed upon the submission of evidence by the contact holder that his/her individual taxable income has increased sufficiently to place them in a higher category.

Life Insurance contributions can be paid annually, quarterly or monthly. Remember that you may get a discount of approximately half a month if you pay annually upfront. All Life insurers differ so please check with your advisor.

What should you insure?

To decide what type of life insurance you should purchase, you need to consider the risks that you are exposed to and how best to manage each one. Risks change, so you should evaluate your situation at least once a year so that you can make appropriate changes when necessary.

The main risks for life insurance are as follows:

• The risk of dying and the financial impact this will have on your surviving family
• The risk of losing your income through some form of disability or impairment that prevents you from being able to earn a living
• The risk of contracting a dread disease and being burdened with the associated costs
• The risk of losing or being denied insurance cover in the future, either because of a temporary inability to make the contribution payments for some reason, or because of your health circumstances changing.

How much should I insure for with my life insurance?

This will very much depend on what stage of life you are at. It is essential for any client to have a holistic financial plan.

Single and no dependents – Your priorities will be for Healthcare planning, Investments and savings, retirement and disability planning.
Married – Healthcare planning, estate, death and disability planning, investments and savings and retirement planning
Divorced – Healthcare planning, estate death and disability planning, investments and savings planning and Maintenance and education protection for your ex-partner and dependents
Retired – Healthcare planning, income and estate planning.

Tips for policyholders

• Always read your life insurance contract documents carefully to understand the basic provisions and benefits. Do not hesitate in asking your financial advisor any questions about the life insurance contract.
• Keep your life insurance contracts in a safe place and let your beneficiaries know where they are.
• Discuss your life insurance with your family and other beneficiaries. It is a good idea to write a letter explaining all your policies and put it with the policy documents.
• Review your life insurance regularly, particularly when there is a change in your family situation, for example if you have more children, or when your children are grown up.
• • Keep your life insurance company informed of your current address. This is essential so that you receive correspondence from your life insurer.

Below is an overview of the relevant payouts that may be affected on you taking up your insurance. This is purely a guide so you are advised to speak to your JustMoney Life Insurance consultant to discuss these in more detail.

Owner

Life assured

Beneficiary

Executor’s
fees

Estate duty

Accrual

Client

Client

None

Yes

Yes

Yes
• Cover value at death
• Surrender value on divorce

Client

Client

Spouse

No

Yes, but section 4(q) deductible

No – to be excluded from both estates

Client

Client

Third Party

No

Yes

Yes

Client

Client

Charity

No

Yes, but section 4(h) deductible

Yes

Third Party

Client

None/another
party
beneficiary for ownership

No

Yes, unless it qualifies for Section 3(3)(a) exclusion

No

Spouse

Client

None

No

Yes – but section 4(q) deductible

No (to be excluded for both)

Client

Third Party

None

Yes – cash value

Yes – cash value

Yes – cash value

Client

Third Party

Spouse
beneficiary
for ownership

No

Yes, but section 4(q) deductible – cash value

No

Client

Third Party

Another party beneficiary for ownership

No

Yes – cash value

Yes

Owner

Life
assured

Beneficiary

Executor’s
fees

Estate duty

Accrual

Client

Client

None

Yes

Yes

Yes
• Cover value at death
• Surrender value on divorce

Client

Client

Spouse

No

Yes, but section 4(q) deductible

No

Client

Client

Third Party:
• Outright
• Collateral

No
Yes

Yes
Yes

No
Yes

Client

Client

Charity

No

Yes, but section 4(h) deductible

Yes

Third Party

Client

None/another party

No

Yes, unless it qualifies for Section 3(3)(a) exclusion

No

Client

Third Party

None

Yes – cash value

Yes – cash value

Yes – cash value

Member

Nominee

Executor’s fee

Estate duty(only
on lump sum)

Accural

Client

None

No

Yes

Yes – unless excluded

Client

Spouse

No

Yes, but section 4(q) deductible

No – at death
Yes – on divorce when excluded

Client

Third Party

No

Yes

Yes – unless specifically excluded