Feature: Walk the road to debt freedom

– and make it last

I was recently featured in the Argus in the Personal Finance section.

Protect your Loved Ones

No one likes to think about death, but there would be real financial consequences for those you leave behind. Inheriting unsettled debt can add to the trauma and stress your loved ones would have to deal with. To avoid such a scenario, it is important to review your risk cover needs and compare these to the risk cover you already have in place, if any.

“Life cover is typically used to settle debt such as a bond on property, finance on a car, credit card debt and funeral costs,” says Sonja Linde, a Certified Financial Planner at InSync Financial Services. “If there isn’t sufficient life cover in place to settle your debt, your family could be at risk of losing their assets, including the family home.”

Although you can take out multiple policies and “earmark” the cover for different purposes, such as settling specific debts, Linde and Tobin agree that a consolidated approach could be more effective. “This makes it easier to do annual reviews, make alterations when necessary and ensure the correct amount of benefits are available for the different purposes,” says Linde. Where a mortgage bond still needs to be settled, bond-specific cover can mitigate the risk of the bank taking cession on a portion of your life cover to settle the bond on your death.

“This way it does not impact your other personal insurance that you have in place for your family’s needs upon your death,” adds Linde.

About the author

Sonja Linde is a CERTIFIED FINANCIAL PLANNER ® with an advanced Postgraduate Diploma in Financial Planning from the University of the Free State. Sonja has accumulated extensive experience in the financial services industry through the past 20+ years in various roles in the industry.

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