When and How to increase life cover

When do I increase life insurance? When it comes to life insurance, using the set and forget strategy might not be the most responsible option. Remember that your family relies on your income and not having enough life cover can have a serious financial impact on your dependants. As a result, it's critical to review your policy every three to five years to see if it needs to be modified. Let's find out how increasing life insurance works and when you should do it as well as when you should have the most life insurance?

Increasing your life insurance coverage

If you need to increase the sum assured on your life insurance policy, you can contact your life insurance provider to raise the cover amount. A consultant will talk you through the process, which will involve providing you with a quote, accepting the new terms of your policy, and changing the amount on your debit order for your life insurance premium.

The average life insurance policy starts with a sum assured amount of R500 000, but some can be lower. If you have a R1 million policy, you can raise your life cover amount to R5 million, for example. Most insurance providers provide coverage of up to R10 million sum assured. 

When should you increase your life insurance? 

When should you have the most life insurance? How can you tell when the time is right to increase your life insurance policy amount? There is no one-size-fits-all answer about the optimal time to raise your life insurance cover because it depends on your unique circumstances. When the need for protection required to keep your loved ones safe becomes greater, it is time to speak to your insurer. 

There are reliable rules for when you should consider increasing your life insurance cover amount, whether you have a lot or a little. These are some life events that should warrant you considering an increase:

• Your income has increased.
• You've reached a certain major life milestone, for example marriage or parenthood 
• The cover provided by your employer’s policy is insufficient.

Have you been promoted at work, or are you receiving additional income from somewhere? That additional income contributes to your family’s lifestyle, and without it, they will likely have to make adjustments. By increasing your life cover when your income is higher, you will help them to maintain the lifestyle to which they’ve become accustomed.

Major milestones such as getting married, having a baby, taking care of elderly parents,and several other less common milestones or life changes might also require additional insurance. 

Many employees assume that the life insurance they receive via their workplace is enough and simply leave it at that. But what if that is insufficient? Do you need to take out your own cover or increase the cover provided by your employee? Remember for any life insurance policy, the cover amount and therefore the premiums need to be adjusted to keep pace with inflation.

Review the cover your employer offers honestly. If your death results in years, if not decades, of lost income and your basic life insurance only covers the gap for a year, you should probably consider increasing your existing level of coverage.

How much more life cover do I need?

Consider the costs that your salary currently covers for you and your family. Consider the lifestyle it will provide for them, and for how long. You need to take into account their current lifestyle, their current and future needs, and inflation to help you ascertain how much cover you need to provide for them. 

Another thing to keep in mind is that the more you put in, the more your beneficiaries get out. But remember, the more cover you have, the higher your premiums will be.  Other factors such as your health, gender, age, and lifestyle will also influence your premium. If you’re not sure whether or not you should increase your life cover, it’s a good idea to speak to someone who can provide the guidance you need like a financial adviser or your financial services provider. 

Talk to us 

Still feeling unsure about when to increase your life cover? Contact 1Life Insurance and a skilled consultant will help you increase your sum assured in line with your needs and your budget. 

We answer your questions about increasing your life cover!

Is it necessary to review my life insurance policy every three to five years?

You should review your life insurance annually or anytime a change in your circumstances happen, such as buying a new home or getting married. It is important to check that you have the right sum assured as well as beneficiary on your policy.

What are the specific life events that should prompt an increase in life insurance coverage?

Some of the specific life events are getting married, buying a new home, becoming a parent and the different stages of your childs life e.g. considering university years from now, as well as empty nesting and retirement. These are some high level events, but life insurance changes with you throughout your life's needs.

How does getting a promotion or additional income affect my life insurance needs?

The only time getting a promotion or additional income will need to be considered if you start applying these earnings to your lifestyle by purchasing a new house or taking on more debt that would need to be covered should something happen to you, but if your earnings increase but you do not increase your assets or debt, you would not need to necessarily change your insurance needs. Do stay on top of your insurance needs by meeting with your advisor or speaking to a skilled consultant annually.

Can major life milestones like marriage or parenthood impact my life insurance requirements?

Yes it can as your cost of living will increase and you then have more people who are dependent on you financially. The moment your debt, assets or persons that depend on you financially change you should look at your insurance coverage.

What if the life insurance provided by my employer is insufficient?

You should see your financial advisor or speak to a skilled consultant to get an understanding of what you need. It is not often that your employer cover will be sufficient and should look at having insurance in your own capacity. We also have an insurance calculator that you can see what your sum assured should be.

Is it essential to consider inflation when determining the amount of life cover needed?

Yes, as inflations definition is the eroding of money's power to purchase over time so you should definitely consider inflation when it comes to the sum assured you have. Do stay on top of your insurance needs by meeting with your advisor or speaking to a skilled consultant annually.