Insurance products that are essential for new parents

During a person’s early working years, the greatest financial risk is related to the fact that you have a fairly long period of working years ahead of you, and that you also have significant future expenses (e.g., a bond, vehicle and School and University fees for children). The risk, then, is that if something happens to you to prevent you from working during that time, your dependents will not have the income you and they expected. Of course, health, life and disability insurance can all help you manage these risks, and it is critical during the early working years that you have access to and use such products to protect yourself and your family.

what insurance products to choose

The most important part is getting life cover

Life cover is needed to ensure that if a parent was to pass away, the surviving spouse (should he/she be unable to work) and children’s financial needs would be looked after until the children have completed their Tertiary Education and found jobs. A financial advisor should be consulted in order to calculate the lump sum needed to provide for your dependants’ monthly needs.

Disability Insurance is recommended if you have debts that need to be paid such as a Bond and Car repayments. This insurance will also ensure that one has additional funds to purchase items such as a wheel chair friendly vehicle, or to adapt one’s home in the event of permanent disability. I.e. building ramps for wheelchairs, and adjusting the Bathroom for the disabled individual.

A close second is income protection

Income protection insurance is very important to own. Income protection insures your greatest asset- which is your ability to earn an income. If you were unable to work due to disability or critical illness, this insurance would pay your monthly salary to you, increasing every year with inflation to age 65 or 70. This will ensure that you never run out of funds and that your family still has two incomes, therefore, ensuring your children will have their needs taken care of and the disabled person is not a burden on the spouse.

It is important that one contributes towards a retirement annuity as if you were still working, so that at age 65, when your income protection ends, you are able to fund your living expenses from your retirement income.

Medical Aid is also vital as the cost of hospitalization, treatments and medicine are expensive and medical aid will release that burden for the family.

Karen van RooyenWritten by Karen van Rooyen




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