Would you let your ex-spouse take out insurance on your life, asks
than as a lump sum.
This is not only for cautious ex-spouses, but for anyone who is concerned that their beneficiaries may blow the money rather than use it to provide an income to replace that of the breadwinner.
“We see cases where there is massive pressure on an individual if they inherit a lump sum to share it with the community, even if the reason for the cover was to provide an income.
“Few people are equipped to handle a lump sum and don’t realise that while R1 million may sound like a lot of money, it only provides an income of R5 000 per month,” says Malan, who adds that many clients are structuring their life cover so that they have a lump sum to settle outstanding debt with an income paid to support the family.
“For many people the idea of a large lump sum makes them uncomfortable, as if they are worth more dead than alive. By structuring the cover as an income, it feels more realistic,” says Malan, who adds that this income also has the advantage that it cannot form part of a new marriage if the surviving spouse remarries.
It also removes any worry about the lump sum being poorly invested or misused.