Four Life Events Where Life Insurance Is Important

Be it a brand new baby, an unexpected divorce or the inevitability of growing old, various life stages or significant events turn us into new versions of ourselves. The footloose and fancy-free youngster makes way for an adult with fresh interests and gradual capacity to take on responsibility. But with more responsibility, our needs and challenges change too. To give you some personal insight, the team at Hippo.co.za spoke to a series of writers and bloggers familiar with how a significant life event can transform your life. We asked them what to expect and how things like having the right Life Insurance plan in place can ease the transition.  

1. Looking after your finances when you get married

Sheena Kretzmer, founder and writer for family blog Shebee

“Before marriage, Jon and I shared a joint credit card that we used for all things household. This included expenses such as our domestic helper, DStv and cleaning products. What it didn't cover were expenses towards Household Insurance, Life Insurance, bond repayments and such. Once we were married, the first thing we did was to buy a bigger house. This opened up a whole new world of financial obligations with things like paying for garden services, alarm systems and increasing our domestic helper's salary as the size of her workspace had more than tripled.”

“A few years ago, someone very close to me found out her husband had cashed in his Life Insurance policy, put their nest-egg savings into a failing business and lost almost everything. Had she not been sensible and taken out her own Life Insurance policy and investments, they would have had nothing to retire on. This made me realise that I couldn't rely on my husband being the only one with Life Insurance policies and investments – I needed them too.”

“It's a huge relief for me knowing that should anything happen to me, I've left enough for my husband to maintain our current comfortable lifestyle, that he and my son will be provided for, and vice versa should anything happen to my husband.”

2. Planning for an upcoming baby

Mandy Lee Miller, owner and editor of Tums 2 Tots Online Parenting Magazine, and popular mommy blogger of Pregnant in Cape Town & Ever After

“From the minute we found out we were pregnant, there was a shift in the way we viewed money. Every cent spent was weighed up against what the baby would need. That responsibility only grows with your child, as the costs of nursery school, keeping up as they outgrow clothing and shoes and toys, providing them with healthy foods – all of these increase daily.”

“As your pregnancy and parenthood progress, your every instinct goes to protecting your child, and your every fear revolves around not being there to look after them. We took out various Life Insurance policies when I was around six months pregnant, to make sure that if anything happened to either or both of us, our daughter and whoever cared for her, would be financially secure. They would be financially secure, have a safe home and enough to live a good life and she’d get a great education. There is a little part of me that was afraid taking that step would somehow jinx us, but that mother’s instinct to do what is best for her always overrode it.”

3. Dealing with the repercussions of divorce

Lili Radloff, editor of Women24

“Along with the emotional turmoil, divorce can also pack quite the financial punch. Where rent and bonds, rates and taxes and monthly household bills were split before, singles now have to cover everything alone. Thus downscaling is often inevitable since you will be without a double income, and paying individual bills gets harder. The actual process of getting divorced can also be costly with legal and administration fees to consider.”

"Important milestones in life often act as a wake-up call and divorce, though unpleasant, also presents an opportunity for growth. After such a dramatic life change, it’s always prudent to reassess your situation and plan for the future accordingly – especially financially, with things like savings plans and Life Insurance.”

This is especially important if you receive child support from your former spouse if you are the custodian of your children. If your ex has a Life Insurance policy but decides to remove you as beneficiary after the divorce, it may be beneficial to take out a Life Insurance policy on your former spouse (but still owning the policy and paying the premiums yourself). When your ex passes away, you'll be able to substitute and maintain the child support.   

4. Going into retirement with eyes wide open

Marilyn Hallett, director of You’ve Earned it, the website for South African over-60s

“Retirement costs money. Typically, many expenses shrink after retirement, but financial obligations include housing costs, utility bills, groceries, increased health costs, transport, taxes and Life Insurance. And don’t forget the reason for retirement – hobbies, travelling, and entertainment – all come with price tags too. You could also be assisting financially with elderly parents, children or grandchildren. The best thing you can do is pay off your debt and mortgage, pre-retirement, which is a difficult thing to do on a fixed pension. Paying off debt will enable you to reduce financial obligations and embrace your chosen lifestyle in retirement.”

“Impending retirement raises the question: Do you still need Life Insurance? I believe it is circumstance dependent. Consider the facts:

• Life Insurance can provide pension replacement if your spouse cannot receive your pension after your death.
• A cash value policy can be used for unexpected expenses.
• An existing Life Insurance policy could offer income flexibility in your long-term retirement planning.
• Life Insurance could pay estate taxes at the time of your death.

Again, benefit from the advice of a financial advisor as to whether you should keep your existing policy or whether you should purchase a new policy as retirement income protection.”

Conclusion

Because we know change is inevitable, Life Insurance offers a safety mechanism to ease the financial anxiety of unfamiliar terrain. Whether you’re moving from student to employee, wife to mother, husband to father or professional to retiree, Life Insurance places the power to look after yourself in your hands. Find out more about the best way to protect yourself at various stages of your life by getting a free Life Insurance quote today.

DISCLAIMER

This article does not necessarily reflect the views of Hippo.co.za and their affiliates. Consumers should always consult and have their insurance needs assessed by a certified financial planner.