A Little Protection ($) Goes A Long Way

Photo credit: Joanna Nix

Typically, any article about women and finance starts with a clever list of tips around budgeting and investing. But I would like to start with the assumption that woman are fantastically good money organisers and investors instead of the reverse assumption!

So you can budget to the end of the month, you invest the right amount of your salary into the right investments; you are basically on track to achieving your financial goals.

But then it strikes – the unforeseen, the black swan, the cataclysmic event …

So. Let’s talk life insurance … that bad and dirty word to most (extending to dodgy life insurance sales men who woo you only to disappear as soon as the policy is issued and they have pocketed a large upfront commission). It is also a grudge purchase … why be forced to pay a large monthly amount just in case something bad might – or might not – happen in the future?

We are of course all superwomen and hence immortal.

Out come the gold capes and we do battle and survive a day of work, children, traffic, stroppy colleagues, queues, groceries, Instagram envy … and still create a Masterchef-worthy dinner.

But I could still tell you a host of ‘fear factor’ stories that would make you weep or become severely depressed (or both); like the young, healthy, and wealthy highflying stockbroker husband who passed away and had no Will and no life insurance, but did have a lovely wife and twin girls and a rather uppity family who controlled all the money in a family trust. Sounds a little Downton Abbey, but there she was having to look after herself.

I have a life insurance policy that costs me R565 per month. This would subsidise my Seattle cappuccino habit 21 times per month! Or half a tank of diesel for my car … or 5 nice bottles of wine.

But instead, this will pay my darling husband out R1 000 000 to pay off some of our mortgage (and my shoe shopping debt). It will also cover me R1 000 000 if I am disabled, which would subsidise medical and lifestyle adjustment bills; as well as a R1 400 000 lump sum for a severe illness.

Now I seriously do not want any of these actual events to happen but just in case … it is worth the R565 per month.

If something happened to you, would someone else have to pay off your debts owed? Would your spouse qualify to take over the mortgage bond alone? Would you be able to adjust your life if you could no longer work – and what would your life look like?

I would rather pay the grudge amount just in case.

So here’s my advice to you …

Find a decent, qualified insurance broker with a good company reputation.

Ask lots of questions as to how things work.

Ask your broker to reduce their commission to lower the premium you pay (you can totally do that!).

Know exactly what you can claim for. If you’re not sure, ask!

I know this may all be sounding too tragic and we should rather stick our heads in the sand and hope to live forever, but with my motto in life being ‘we’re here for a good time, not a long time’, I still feel the need to make sure I do some of the right and sensible things in life … and so I, for one, will keep paying those premiums.

Because a little protection goes a long way

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Renée Coughlan
Renee Coughlan is passionate about educating South Africans about financial topics. She does what comes naturally to her, which is coach, teach, inspire and excite people about investing. Her key message is to be curious, to learn and to put what you learn into practice. She has been a professional adviser and investment consultant for almost two decades.