Life insurance

KleinBoontjie

KleinBoontjie

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So how big of a scam is Sanlam/Old Mutual life insurance?
My mother visited us tonight and at one point we were talking about increases in a lot of day to day stuff and she said that her life insurance installment is getting out of hand. Life insurance with Sanlam is now over R2000 per month with after increase with no noticeable increase in cover. She's 70 and had this life insurance for over 30 years.
I told her to cancel. She doesn't want to as she says she won't get anything out, even after the 30 year contribution. I told her again that I don't care about inheriting, and she can score month to month, but old people and their money......
So WTF is it with these life insurances that has nothing to offer the living? And WTF is it with old people still believing in this kak? Is there anything I can counter offer an old person to drop this and get something else?
It just seems that if you pay for over 30years, that when you cancel you should at least get a small cut back.
 
TBH I don't think Life insurance is a scam.

It is/should be exactly what is says on the tin.

Having said that R2k a month is hefty imo.
 
KleinBoontjie said:
So how big of a scam is Sanlam/Old Mutual life insurance?
My mother visited us tonight and at one point we were talking about increases in a lot of day to day stuff and she said that her life insurance installment is getting out of hand. Life insurance with Sanlam is now over R2000 per month with after increase with no noticeable increase in cover. She's 70 and had this life insurance for over 30 years.
I told her to cancel. She doesn't want to as she says she won't get anything out, even after the 30 year contribution. I told her again that I don't care about inheriting, and she can score month to month, but old people and their money......
So WTF is it with these life insurances that has nothing to offer the living? And WTF is it with old people still believing in this kak? Is there anything I can counter offer an old person to drop this and get something else?
It just seems that if you pay for over 30years, that when you cancel you should at least get a small cut back.
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Say you are 30, with a wife and two kids. You have a house (15 years left on bond) and you are earning a decent salary. If you were to die in a motor accident, do you want your wife to get nothing to use on her and the kids? Or do you want her to get R5 million to work with?

Your mom is paying so much, because the risk of her dying is higher much. How are they scamming her, are they stopping her from cancelling? I put it to you, she is scamming herself by treating it like savings, and I also put it to you that you are not as smart as you think about this kak.

Technically one should build ones wealth and cancel the life insurance when one has suitable resources built up. When one is able to self insure (by having a nice bunch of money in ones pension fund), or there is no dependents to take care of financially.

I agree that there are probably much better things your mom can do with R2000pm and if there are no dependents that need the money, she should stop it and enjoy life with it now.
 
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Depending on how much the payout is, and who/how many beneficiaries, and what kind of condition the old bird is in, it may be a very effective savings plan for you to take over the payments and wait…
 
My father have the same thing with Discovery, but the premium is R15000. Sadly, he started it roughly 20 years ago. Lump sum payout aint much. If he cease’s it or stop it, it gets cancelled immediately

My advice years ago: Please stop it, its a waste

But he is carrying on like a donkey paying it

 
I have cover for around R17bar. I pay it without a blink every month. It's just one of those expenses that are non-negotiable.

I don't have much to my name, but I have learned now with the passing of my father, you need liquidity if your estate is worth something to cover the estate duties, as well as something left over for your wife/kids. In my case just kids.

You don't want them to sell off your house just to pay SARS.

May father's whole setup with the Discovery eco-system worked for him. He maintained vitality diamond status and had life insurance integrator stuff and medical aid with them. He got a pay back of around R6bar when he turned 65 I think.

Atm I know I am paying too much. Will adjust the cover options soon.

FYI I got another R10m life cover quote from Capital Legacy for around R2k pm. Not too bad I think. I think I pay Discovery around R20k a month for medical, life insurance, and a small RA I started years ago with them.
 
Need to know more information. How much is the payout when she is no more.

Don't stop it now if she / you help can continue to pay it. Bad advice. 10 - 20 million payout in the next 10 years is not bad. Then reinvest.

Well done to your mom for thinking of the next generation.

Parents should not always take advice from their kids and should see a financial advisor.
 
Without specifics it's impossible to provide any meaningful feedback. Also, why does it have to be having the existing cover versus none at all? Maybe she could reduce the cover to an amount she actually needs if she is overinsured, and make the premium a bit more manageable
 
Not a scam. Life Insurance for peeps over 60 will always be expensive. Her kids should be managing that cost as it’s effectively a portion of their inheritance and good liquidity to have while waiting for an estate to be finalized.
 
you could add the inflation increase every year to your policy , times that with 30 years and you can see where the premium is going
 
Not a scam unless it was mis sold.

The life cover must have a purpose. For example it needs to settle debts, pay for estate windup fees and taxes upon death. If it has no purpose there is no point having it.

Difficult to tell if R2000 is cheap or not without knowing the cover. Some companies will allow you to stop paying premiums and keep the cover (maybe at reduced amount) under certain conditions. Always best to phone and find out what the options are. Also read the policy documents.
 
R2k is cheap considering the old age risk. Even if you look at it over 30yrs, you are paying R2k * 360 months = R720k in order to receive millions. It's a good deal whichever way you look at it.
 
captainscarlet said:
R2k is cheap considering the old age risk. Even if you look at it over 30yrs, you are paying R2k * 360 months = R720k in order to receive millions. It's a good deal whichever way you look at it.
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Sure but there is an opportunity cost to money. At 10% annual growth over 30 years a 2k monthly deposit world be worth 4.1 million after 30 years not 720k.

Also policy costs tend to inflate every year. For example at a 5% inflation it would have been 6.6 million.

Life insurance is not a good deal whichever way you look at it, if it was how would insurance companies stay in business?

You are buying piece of mind that your dependants will be secure, but financially on average the average person will be worse off.

if you have dependants I do still recommend it.
 
TiredPlatypus said:
Sure but there is an opportunity cost to money. At 10% annual growth over 30 years a 2k monthly deposit world be worth 4.1 million after 30 years not 720k.

Also policy costs tend to inflate every year. For example at a 5% inflation it would have been 6.6 million.

Life insurance is not a good deal whichever way you look at it, if it was how would insurance companies stay in business?

You are buying piece of mind that your dependants will be secure, but financially on average the average person will be worse off.

if you have dependants I do still recommend it.
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Yeah, there is a point where one can cut the coverage, where ones accumulated wealth (retirement and other savings) matches the payout or dependents have left the house or similar.

I wonder if some people might see it as a way to leave something for those left behind? Say the person didn't or couldn't accumulate wealth,
 
supersunbird said:
Yeah, there is a point where one can cut the coverage, where ones accumulated wealth (retirement and other savings) matches the payout or dependents have left the house or similar.

I wonder if some people might see it as a way to leave something for those left behind? Say the person didn't or couldn't accumulate wealth,
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The easiest form of inheritence IMO. No capital gains tax unlike physical assets and other investments.
 
captainscarlet said:
The easiest form of inheritence IMO. No capital gains tax unlike physical assets and other investments.
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Sure is easy but if you live to the average age it will be less then if you invested the money. Isurance companies have to win on average or they go out of business and they employ smart people to ensure they do.

If avoiding tax is your goal retirement annuities fall outside your estate and don't get estate tax. They also not subject to capital gains tax.

You are confusing insurance and investments both important but they serve different purposes.
 
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