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You know how inflation has made the cost of living more expensive. The toothpaste that suddenly comes in a smaller tube for the same price or the dozen eggs that cost a few rands more are all evidence that prices rise over time.
Inflation is as important for your life cover as it is for your budget. Your life cover is there to pay your family’s living expenses when you are no longer around. If those living expenses have increased and your sum assured hasn’t, your family may not be able to afford all the expenses you wanted to provide for.
For example, if you took out a policy for R1 million in 2010, because this would cover expenses in 2010, inflation means that today, in 2022, you would need R1.6 million to pay for those same expenses that only cost R1 million 12 years ago! We have assumed inflation at 5% per year.
How to increase your sum assured
Not all 1Life policies allow for annual inflation related increases in the sum assured.
The sum assured on older policies does not automatically increase annually. However, 1Life does review these policies from time to time and may increase cover to take inflation into account, as happened in 2019. Newer policies have an option where policyholders can select an annual increase in the sum assured that is either aligned with inflation or a flat 5%.
You can check your policy schedule, which you can view online on our policyholder service portal or request on our WhatsApp service to see if your sum assured increases annually and by how much.
If your sum assured has not increased but your living expenses have, you can request a change to increase your sum assured. Chat to your financial adviser or a skilled 1Life consultant on 0860 10 51 94, request a call back or contact us on our online policyholder service portal for help with your request. 1Life will assess the application to work out the additional premium amount and if any underwriting information is required, such as answering some health questions or taking an HIV test.
Top tip: 1Life’s Guaranteed Assurability benefit means you can increase your cover amount by a percentage of the original sum assured after a significant event, for example the birth of a child or a marriage, or on every third policy anniversary, without any underwriting other than an HIV test, if required.
If you've got a question our client services consultants are here to help. Leave your details and we will call you back.
How much will it cost to increase your life cover?
More cover will mean a higher premium, but this depends on how much additional cover you want and whether or not your risk profile has changed, such as whether or not you have taken up or stopped smoking, changed occupations or had a change in your health. Increases in cover do not usually increase premiums by large amounts. It is well worth applying to see how much an increase would cost.
Affordability is always a consideration, but some cover is always, always better than none. The closer you can get to the amount of cover you need, depending on your budget, the more security you and your family will have.
Don’t skip regular insurance reviews
Expert financial advisers always recommend an annual review of your financial affairs, including your insurance. This is to make sure your insurance still offers you and your family protection, and that you are not over or underinsured. When you complete these reviews, don’t forget about the cost of living increases. Increasing your cover to meet these expenses could change your family’s life when they most need it!
In addition to reviewing your insurance policy annually to take cost of living increases into account, you should also review your insurance when a big life change happens to make sure you and your family have enough cover. These include:
- Getting married
- Buying a home
- Having or adopting a child
- Starting or expanding a business
