When to Get Life Insurance

broker discussing life insurance with couple


Death, taxes and loadshedding are the three inevitabilities of (South African) life – and having life insurance can help your loved ones deal with all three, if you start early enough.


Nobody likes to think about things like Life Insurance, especially when they're young and in the prime of their lives! That's when you want to spend your money having fun with your friends, driving a nice car, and taking a holiday. The thing is, when you get a little older you find that life is mostly about the amazing family you've built; a car just becomes something that gets you to work and back; and holidays are more about child-friendly paddle pools than cocktails on the beach.


That's normally when you'll start thinking about Life Insurance to ensure that your family is looked after if something happens to you. But you could have made better provision for them if you'd done this sooner.


What is Life Insurance?

Brina Biggs, Senior Marketing Manager at 1Life, one of Hippo.co.za's life insurance partners, explains that life insurance is a risk policy that allows you, as a breadwinner, to financially provide for your family when you pass away. In other words, it lets you replace the income you would have earned when you're no longer around to support them.


Here's how it works: First, decide how much money you want to leave behind. Then use a free comparison tool to find a policy you like and a premium you can afford. Finally, start paying a monthly premium. As long as those premiums are up to date (and subject to a few terms and conditions), your loved ones will have access to a financial buffer should you pass away.


Read more: Frequently Asked Questions about Life Insurance


When should you get life insurance?

George Kolbe, Head of Life Insurance Marketing at Momentum says that you should take out life insurance as soon as one (or more) of these three things happen: you have an income that you want to protect against disability or critical illness, have debt that will carry on after your death or have people in your life who depend on your income or assets. "In 2021 the youngest claimant to receive a critical illness claim payout was 22 years old," she says. "That illustrates that you're never too young to start protecting your journey to financial wellness."


If you've left it late and are already approaching retirement age, then consider the value of life insurance for estate- planning purposes. Life insurance can provide a tax-free payout to beneficiaries, which will help cover estate taxes so your heirs receive the full value of your estate.


Why should you have life insurance?

You'll never see the benefits of your life insurance. But, as Biggs explains, it's not about you. "It is an act of kindness or love for your family so that their lives can continue without piling financial stress on top of their loss," she says. "It means they can continue living in their family home, that there are funds to go to school, that they can keep paying the Medical Aid and that they can just keep their lives running."


While it can be seen as a policy to help secure their immediate future, it's also a way to build generational wealth. Being given enough money to continue with their lives and having some left over — or getting the kind of education that sets your kids up to look after themselves and other loved ones you leave behind — can leave an impact that's felt long after you're gone.


Why should you have a 'living benefit'?

"One aspect of life insurance that people often forget about is disability and critical illness cover," explains Elistia Marx of Specialised Governance Support - Financial Crime Compliance at Absa. "It's also referred to as a 'living benefit' and can be included as a part of your Life Insurance, which assists you in dealing with a disability that you might encounter in your life or perhaps a critical illness such as cancer."


Do you still need Life Insurance if you have investments?

Investments and a Life Insurance policy are part of responsible financial planning, but they serve different functions. They're two very different streams that can complement and fulfil different needs for you and your family. If you start saving or investing R450 per month at 7% interest with zero escalations, you could guarantee your family savings of just over R2 million in just over 48 years. However, paying a life insurance premium would immediately guarantee your family access to the same amount, subject to the terms and conditions of your policy. That's a huge benefit.


Do yourself — and your family — a favour and compare life insurance quotes so you can begin to secure their future right away.


This article is for informational purposes only and should not be construed as financial, legal or medical advice.

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