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