When looking at Life Assurance, Disability Cover, Dread Disease Cover and Retirement Planning you should firstly use a professional Financial Advisor to assist you, and preferably an advisor with the CFP qualification (Certified Financial Planner) and a member of the Financial Planning Institute of South Africa.
In approaching your Financial Planning the planner should follow these steps:
1. Collect all your Personal Information. This would be done through a Spotlight Questioner and will identify the following:
- All Personal assets (including those in a Trust)
- All Liabilities
- Your Financial Objectives on Death, Disability and Retirement
- What is important to you as far as your Financial and Estate Planning is concerned
You will need to give the Financial Planner permission to get all your policy Information via a Letter of Authority.
2. A 20-page graphic report should then be presented giving you details of your current Financial Position compared to your Financial objectives.
This is the most outstanding report as it is easy to read allowing you to make informed decisions with regards to your Life Assurance, Disability Cover , Dread Disease Cover and Retirement Planning
Example: If you wanted your Family to Live on an income of R50 000 per month after all Liabilities are paid off the report will be able to tell you precisely what Shortfall or Exess Cash you have in your Estate after taking into account all assets you have that are turned into Cash on your death as well as your Life Assurance. In other words if you were to sell your Business on death the cash received from the business needs to be taken into account in addition to your Life Assurance. It also takes all income generated by investments or any other means like your spouse earning as salary.
Financial Objective R50 000 per month increasing at 8%pa for the next 30 years (spouse age 50- Life expectancy age 80)
Life Cover in force R10 000 000
Assets to be turned into Cash R5 000 000
R10 000 per month Rent From Property
Spouse earns R15 000 per month to age 60
3. You are presented with the report taking all the above information into account and then allowed to make a decision on as to what part of the report you wish to implement.
4. Any policy taken out is delivered personally and explained in detail
5. Annual Follow up meetings are arrange to keep your financial planning on track