10 Jun

Life Insurance Cover

Life is priceless. Although money cannot replace life, life cover provides financial security to dependants. A life policy can provide cover for your entire life or for a specifically set period, such as throughout a child’s tertiary education. The policy pays out a lump-sum to dependants upon death of the life assured.

In addition to paying a death benefit, a life policy also builds up cash value. Other benefits include:-

  • Estate duty payments;
  • Lump-sum pay-outs to the surviving family/ beneficiary;
  • Company profit sharing, such as sum-assured plus declared bonus/profits;
  • Pension boosting
  • Collateral/mortgage protection: you may borrow on the basis of a life plan.

So how much life cover do you require?

This will depend on your personal circumstances and will be influenced by factors such as mortgages, loans, children’s education and household bills. It is

important to understand all other benefits that will come to your family, for example, your employer may pay out your accumulated retirement savings and some life cover. Ultimately, the amount of cover you can buy depends on your budget. Do not be discouraged if what you can afford is far below your requirements- every little amount will be a big help.

Individual retirement plan

This is a savings plan for individuals who want to save in order to receive an income during retirement. The difference between a retirement plan and other savings’ vehicles is that it is more regulated to ensure that investors do not lose out. Moreover, contributions to retirement plans and any resulting investment returns are tax free (up to a limit). In most instances members can make personal contributions on a recurring or ad hoc basis. Because pension income is never enough, anyone below the retirement age stands to benefit greatly from this plan.

Broadly speaking, the beneficiaries of this plan are those who are self-employed, working for employers not offering pension funds, or pension fund members who would like to boost their retirement income. Members will have access to their retirement benefits on or after the age of 55 and at any point on medical reasons- subject to a medical certificate or confirmation from doctor (ill-health early retirement). Your dependants will have access to your accumulated funds in the event of your death.

Health insurance policy

Personal and family health cannot be taken for granted. Medical services are expensive and one illness can easily wipe out years of savings. With a health plan, you take charge of your life. Health insurance packages offer different levels of services and expenditure to suit your budget and your family’s specific

needs. In addition, your expenses can be lowered by using ‘in network’ doctors, hospitals, pharmacies and other health care providers.

Some low budget products have b e e n l a u n c h e d t h a t p a y f o r medical treatment at Government and local authority, mission clinics and hospitals, while hospital cash plans offer you a fixed cash amount for a day spent in hospital. When comparing plans, consider what expenses are covered and the annual limits for each policy. Will the policy pay for physicals, shortfalls, and other preventive care? How about prescription drugs and dental care?

Savings Plan

A savings plan is a great way to save regularly and can help anyone reach his/her financial goals. There are many types of savings vehicles available on the market, such as education and general savings plans. The difference between these savings plan and unit trust accounts is that sometimes you can

get a death premium waiver, which injects savings contributions to your plan even after your death.

This increases your fund’s potential to grow until the end of the policy term. Usually you can choose the term of the policy, which normally varies 5-20 years. Normally a minimum contribution amount is stipulated and you have the flexibility to make contributions monthly, as a lump sum or as and when you can.

Knowledge is power

All the products we have discussed in this article meet specific needs. Some will overlap with products that you already have or with the benefits that you currently get at work.

The Life Offices Association recommends that you make use of financial advisors and reputable online financial planning resources, offered by most local financial services firms.


This article was written by the Life Offices Association of Zimbabwe

Address: 7 Lloyd Close, Ballantyne, Harare +263-242-884646, 884677 & 88462