Life cover: how much, and for how long
Life cover is simple to understand and easy to get wrong in two ways: buying an amount that sounds sensible instead of one that is worked out, and answering the health questions carelessly. Here is how to do both properly.
What you can actually buy
Start here. Choosing the wrong level is a more expensive mistake than paying slightly too much for the right one.
Life cover
The core cover.Pays a lump sum to the people you name when you die. That is the whole product. It is meant to replace what your income was doing for the people who depend on it.
Disability cover
Pays out if you are permanently unable to work. Statistically more likely than dying during your working years, and routinely skipped because it is less obvious.
Dread disease or severe illness
Pays a lump sum on diagnosis of a listed serious condition such as cancer, a heart attack or a stroke. It covers the costs that come with being seriously ill rather than the medical bills themselves, which are your medical aid's job.
Income protection
Pays a monthly amount while you cannot work, rather than a lump sum. Often the most useful of the lot for someone whose household runs on a salary.
What catches people out
None of this is hidden. It is all in the wording nobody reads until the day they need it.
Non-disclosure
The health and lifestyle questions matter more than anything else on the form. If something was left out, even by accident, the insurer can refuse to pay when it matters most. Declare everything, including the things you think count against you.
Premiums that rise every year
An age-rated policy starts cheap and climbs as you get older, sometimes steeply in later years. A level premium costs more at the start and stays flat. Which one you have changes what this costs you over thirty years enormously.
Waiting periods on suicide and some conditions
Most policies have an initial period, usually the first two years, during which certain causes are excluded. It is standard, but people do not know it is there.
Naming the wrong beneficiary
The payout goes to whoever is named on the policy, not to whoever is in your will. If those two documents disagree, the policy wins, and that is how estates end up in dispute.
What moves the price
Some of this you can change and some you cannot. Knowing which is which is most of the negotiation.
- 01
Your age
The single largest factor, and the reason cover bought at thirty costs a fraction of the same cover bought at fifty.
- 02
Whether you smoke
Usually the biggest single lifestyle loading, and it applies to vaping with most insurers too.
- 03
Your health
Blood pressure, weight, cholesterol, family history. Some insurers price these more kindly than others, which is exactly why comparing matters here.
- 04
What you do for a living
Physical or high-risk occupations are rated differently, and it affects disability cover more than life cover.
- 05
How much cover, and for how long
The amount and the term. Cover to age sixty-five costs less than cover for life.
What to ask before you sign
Ask these, and get the answers in writing. A good insurer will answer all of them without hesitating.
- 1Are my premiums age-rated or level, and what will this cost me at sixty?
- 2Exactly what did I disclose, and is there anything I should add now?
- 3Who is named as the beneficiary, and does that match my will?
- 4Is there a waiting period, and what is excluded during it?
- 5Does this include disability or severe illness cover, or is that separate?
- 6What happens to the policy if I miss a payment?
Questions people ask
- How much life cover do I actually need?
- Start from what the money has to do rather than a round number. Add up what you owe, including the bond, what it would cost to raise and educate your children, and the income your household would need to keep running for a set number of years. Then subtract cover you already have through work.
- Do I still need life cover if I have it through my employer?
- Often yes. Employer cover is usually a multiple of salary, which is rarely enough on its own, and it almost always ends when the job does. That is the worst possible time to be shopping for new cover, because you will be older and any new health issue will now be on the record.
- Will the insurer pay if I did not mention a health condition?
- It can refuse, and this is the most common reason large life claims are declined. Insurers check medical records at claim stage. Disclose everything at application, including anything you were investigated for even if nothing came of it.
Work it out yourself first
Ready to see what it costs?
Tell us once, and you choose which insurers get your details. No cold calls from anyone you did not pick.