You may be considering getting one, already have one in place or still weighing up if having a life insurance policy will be worth it. However, when it comes to some of the benefits of a life cover policy you may also wonder if it can help build wealth? Here is what you need to know.
Can you build wealth through a life cover policy?
Creating a financial safety net that gives you and your loved ones peace of mind that all your bases are covered is something we all want to achieve. There are many ways to build wealth or a financial security net for you to fall back on when you need it the most. Life insurance is one of the basic covers to have when it comes to creating financial stability for you and your loved ones.
It can also be used to strengthen your financial portfolio and wealth for your loved ones, depending on the amount you are covered for. You can be covered for a minimum of R500,000 - R10 million depending on the insurer you choose. Speaking to a financial advisor can help you and your loved ones work around how you can build and protect the wealth you are working hard to create.
It can be used to cede a loan
Purchasing a place that you can call home is a major step that you could make financially. Property is also a great starter to build wealth for you and your loved ones. Taking out a home loan is something most South Africans have to do to secure their home, but in order to do this you will have to prove that you can pay off your home loan. Having a life cover policy in place proves to lenders that you can pay off your loan even in the event of you passing away. When you cede your cover, this means that you give the bank or a lender the power to claim the amount that you owe from it. It is better to understand how doing this will affect your policy during the claims stage to avoid any confusion.
Cover educational costs
You can choose to use your life cover payout towards paying for educational expenses. Having a will in place that states your wishes on how you would like the policy payout to be used can make it less frustrating for you and your loved ones. It will also give you peace of mind knowing that the safety net you are working so hard to create is kept in place for your beneficiaries.
Cover daily living expenses
You can use your life cover to cover an array of expenses. When it comes to understanding how much life cover is enough for you and your loved ones, the first step is to think about your daily living expenses - especially if you are someone other people rely on financially. Our life insurance calculator can also be a handy tool. Removing the stress of knowing that your loved ones will be financially protected to live the life they are accustomed to, even when you are gone, is one of the benefits of having a policy in place.
The payout can be used towards investments
Having a plan on what you would like the payout to be used for can also help you and your loved ones build wealth. Another option is having some of the funds put towards investments that can continue to generate further funds. This could be in the form of shares, trusts, or starting a business.