Life insurance is a critical part of financial planning and the sudden loss of family members due to Covid-19 brought to light just how much we need to plan for our departures.
It gives one peace of mind, knowing that should you depart, your family will be able to deal with it all.
For many of us, we were “forced” to take insurance covers, either as part of a loan application process that required a cession to act as insurance or a mandatory employment condition. As a result, we are often not fully aware of the choices we have. In this piece, we will explore the top four changes and benefits I have seen over the years, that I believe you ought to know, to make the most of your insurance cover.
Ceding of life covers to multiple lenders
Recently introduced by NAMFISA, consumers are now allowed to cede one insurance cover to multiple lenders to the extent that the cover amount is sufficient to act as security. Prior to this change, it meant that consumers had to choose either to stay with the same lender for future financing needs (taking away the ability to obtain competitive rates) or create the need to take additional cover, which is costly. This change should thus trigger you to evaluate your current insurance to see if what you have is still necessary and competitive.
Getting a bonus on your retirement based on your wealth portfolio
As the industry gets competitive, customer loyalty becomes very crucial. Insurance companies have started incorporating insurance products in wealth portfolios and awarding bonus benefits to their active clients. These benefits are unlocked upon meeting certain requirements (and retirement is one of them). These range from bonus pay-out as well as the ability to participate in cash back benefits. If you gain something from being loyal to an insurer that is also competitive, why not take advantage of that?
Bringing forth contribution to end at retirement instead of continuing until death
This is a game-changer. Whilst you may not know how long you’ll live after retirement, what is certain is that the income level that you are likely to have in retirement will be lower than the years preceding that. If you can pay a little extra today to avoid carrying that cost in retirement, it might be worth it.
Converting your group life cover to individual cover upon leaving an employer
Belonging to a group cover is an affordable way to be covered, but the benefits lapse as soon as you change employment. The opportunity to convert group cover without having to undergo medical check-ups can be lucrative.
With all these benefits, you really need to take time to review your current cover and evaluate if yours is giving the best for your money, but remember, insurance is a risk product, if you choose to cancel, there is no refund for what you already have contributed.
*Klestina Kauhondamwa is a Chartered Accountant by profession.
