Life and Disability cover

DO NOT expect your life and disability cover to give you something back except money when you die and money when you become disabled!

This is like any other insurance, it should NOT be confused or combined with investments.

Life and Disability are very important when you are dependent on an income generated by yourself and on you being there. If you have enough passive income like interest, dividends, profit share, rental etc. that will continue paying in your absence, your need for cover diminishes considerably.

Let's look at life cover:

You need enough cover to pay off all your debts and leave your dependants with either a lump sum or an annuity income that will be sufficient to replace the loss of your income. If you have no dependants, any cover is a luxury that will enrich someone else and the premium should be invested rather than spending it on insurance.

And disability cover:

In this case you are still alive and need the money so you have to cover debts and income loss even though you have no dependants!

How Much?

Enough to cover debts and loss of income. If you have children the need for cover becomes more important because without your contribution the spouse will have to double up! Most financial planners have programs that will calculate how much you need in a heartbeat.

Investment and Cover:

Usually you should separate the two. If you buy a product that has both in one plan, you will confuse the matter and pay more and get less. Determine how much cover you need and get quotes, take the cheapest. Then see how much you have left to invest and go seek quality, regardless of price!

Serious stuff:

You should not tempt fate! You need disability until you are financially independent, then you need it no more. You need life cover whilst you have dependants relying on your income. When you become financially independent, you need it no more.