FIT FI­NANCE

Samke Mh­longo shares the im­por­tance of hav­ing life in­surance in or­der to en­sure that your fam­ily is taken care of.

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Samke Mh­longo talks about the im­por­tance of hav­ing life cover

Let me start by wish­ing you a happy 2019, and only the best for the year ahead! I can’t help but re­flect on how we en­ter ev­ery year with re­newed hope that it will be bet­ter than the pre­vi­ous one. But, the re­al­ity is that each year car­ries with it its own share of ups and downs as well as wins and losses. It is al­ways sad to see fam­i­lies fall­ing apart af­ter the death of a loved one, es­pe­cially if the fight­ing is about who bears the pri­mary right to the es­tate of the de­ceased. These in­ci­dents make me ques­tion whether my life pol­icy is up to date; and in ad­di­tion, that of the fa­ther of my chil­dren. But, how do you even be­gin this con­ver­sa­tion with­out be­ing ac­cused of plot­ting mur­der?

Well, I have ded­i­cated this year to some se­ri­ous “adult­ing” and bet­ter management of my re­spon­si­bil­i­ties. So, I did some re­search on life poli­cies, and will share some in­ter­est­ing find­ings with you – my dar­ling read­ers.

THE BA­SICS

A life pol­icy is an agree­ment that brings into ef­fect the life cover or in­surance taken out over an in­sured per­son.

It is gov­erned by the In­surance Act of 2017 that was signed into law in Jan­uary 2018. Vi­rath Jug­gai, cer­ti­fied fi­nan­cial plan­ner and risk man­ager at Gra­didge-Mahura In­vest­ments, says in or­der for a pol­icy to be ef­fected, there must be a pol­i­cy­holder or owner and a life in­sured. And, both these roles are usu­ally the same per­son. An­other party to this agree­ment is the in­surer – the in­sti­tu­tion that is pro­vid­ing the in­surance ben­e­fits. Vi­rath adds that when you ap­ply for a life cover, the in­surer will re­quest med­i­cal tests and health dis­clo­sures to prove that there are no pre-ex­ist­ing con­di­tions. Depend­ing on your health, age, oc­cu­pa­tion, level of ed­u­ca­tion, in­come and smok­ing sta­tus (no ly­ing or omis­sion of the truth), the in­surer will pro­vide the cost­ing of the pre­mium to be paid monthly, or yearly in some cases.

THE IN­TER­EST­ING PART

These are straight­for­ward facts that many of us are al­ready fa­mil­iar with. But, I would like to dis­pel the myths around tak­ing cover on your spouse or es­tranged lover with­out their knowl­edge. Such cases were the sto­ry­line of many movies screened in the 90s be­fore we had “Black Twit­ter” for ver­i­fi­ca­tion. Cindy Blan­chard, op­er­a­tions man­ager at Gen­eral Rein­sur­ance Africa Lim­ited, ex­plains that in or­der to take out a pol­icy on some­one’s life, you need to prove that you have in­sur­able in­ter­est on their life. For ex­am­ple, prove that you will suf­fer fi­nan­cial loss as a re­sult of their death or dis­abil­ity. Vi­rath adds that this ap­pli­ca­tion re­quires your sig­na­ture grant­ing per­mis­sion for the cover to be taken, and med­i­cal tests as part of the un­der­writ­ing process. Un­for­tu­nately, not all in­sur­ers fol­low this process. And, Cindy cau­tions that it is pos­si­ble to have your life in­sured by a third party with­out your knowl­edge. Ac­cord­ing to both Vi­rath and Cindy, even worse is that there is no avail­able pub­lic plat­form for you to check if life cover has in­deed been taken out over your life! It seems that the 90s movies weren’t too far-fetched af­ter all. Luck­ily, I am the di­rec­tor of the movie that is my life, and uBabes weFi­nance is al­ways one step ahead.

HOW TO PRO­TECT YOUR­SELF

Al­though there are no pub­lic plat­forms to check the poli­cies taken by third par­ties over your life, Cindy says fi­nan­cial ad­vis­ers have ac­cess to sys­tems on which they can do this on your be­half. But, Vi­rath points out that this ap­plies only if the plat­form that ad­min­is­trates that par­tic­u­lar in­surance ac­tu­ally pulls through that in­for­ma­tion on those sys­tems. If not, even they won’t be able to tell. How­ever, if you are lucky enough to iden­tify a case of in­surance taken out with­out your con­sent, Vi­rath ad­vises that you ap­proach the in­surer di­rectly to re­port the mat­ter. Also, con­sider es­ca­lat­ing it to the In­surance Om­buds­man or Fi­nan­cial Sec­tor Con­duct Au­thor­ity.

OTHER OP­TIONS

There must be a sim­pler way to en­sure that my loved ones are taken care of af­ter my death. Re­fer to my Septem­ber col­umn (Your fi­nal act of love) on wills, and the Oc­to­ber one (Build­ing a legacy) that cov­ers trusts. Un­for­tu­nately, not all of us have busi­nesses, prop­er­ties or large in­vest­ments to hold in those trusts. There­fore, the life cover con­tin­ues to be an af­ford­able way of leav­ing some­thing be­hind as it costs a small amount ev­ery month, with a pre­de­ter­mined guar­an­teed value. Both Cindy and Vi­rath agree that given the cur­rent strain on peo­ple’s fi­nances, build­ing up a large in­vest­ment is not an op­tion for many. And, in­surance there­fore con­tin­ues to of­fer a safe way of en­sur­ing that your fam­ily is not left des­ti­tute.

FI­NAL THOUGHTS

Think­ing about life cover and death may not be the con­ven­tional way to kick off the year. But, life is much sim­pler when you take care of the dif­fi­cult tasks up­front. No one knows what 2019 has in store for them. But, by tak­ing care of the “un­com­fort­able”, you can en­sure that it doesn’t bring what you don’t want.

There is no avail­able pub­lic plat­form for you to check if life cover has in­deed been taken out over your life!

Samke Mh­longo Per­sonal fi­nance and wealth guru

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