One of the most important financial decisions you can make is ensuring that your loved ones are adequately protected in the event of your passing. A key element of this protection is life cover, which provides financial security and peace of mind during life’s most uncertain moments.
However, one of the most common questions we receive is:
“How much life cover is enough?”
There is no one-size-fits-all answer, but a good starting point is to consider the following:
1. Debt and Liabilities
Ensure your cover is enough to settle:
- Outstanding home loans or vehicle finance
- Credit cards and personal loans
- Any business-related debt you may be liable for
2. Monthly Living Expenses
Multiply your family’s monthly expenses by the number of years they would need support. For example:
- School fees and education costs
- Household expenses and healthcare
- General living costs for your spouse and/or children
3. Future Commitments
Consider funding future needs such as:
- Tertiary education for children
- Retirement funding for your spouse
- Emergency savings for your family
4. Existing Cove
Review any group life benefits, investments, or assets that may reduce the additional cover required.
A Practical Example
A typical formula used in the industry is:
(Annual income × 10) + Total debt – Existing life cover = Additional life cover needed
We understand that each individual’s situation is unique. That’s why we recommend a personal consultation to calculate a figure that suits your current lifestyle, dependents, and long-term goals.
Next Step:
If you would like us to review your current cover or determine the right amount based on your specific circumstances, please reply to this email or contact us directly on wealth@rta.co.za.
We are here to help you make informed and confident decisions about your financial future.
