Buying a first home is a big step for anyone – you’ve saved up for a deposit, been granted a provisional home loan and found a property that balances what you like and what you can afford. You make your offer. It’s accepted. Then comes a raft of unexpected fees, including transfer costs, bond registration and conveyancing fees, deposits for lights and water, household insurance, and, even life insurance. It can all seem a little daunting – and make owning a home seem far more expensive than you initially budgeted for.
While the first set of fees – the lawyers, the rates and the transfer and bond costs – can seem like money down the drain, life insurance shouldn’t be a grudge purchase. If anything, it’s the one thing that safeguards your investment in the event of something unfortunate happening to you. It helps remove the unnecessary financial burden of covering your bond costs (or waiting out a bank auction) from your family’s shoulders and means that they won’t have to worry about covering any financial shortfalls.
Insurance can seem like a purchase fuelled by fear and plenty of people don’t like to think about bad things happening to them, but unexpected events – Hello, COVID-19! – do happen, and can cause a financial and personal ripple effect beyond your own life, and into that of those closest to you. Whether it’s life insurance to cover something terminal, critical illness cover to help you financially in the event of a serious condition, or income protection in the event that you’re incapacitated by an illness or accident and can’t earn your regular salary, you’re not invincible and will need help at some stage.
Some banks or home loan originators don’t expect you to have life cover, but it’s the responsible thing to do – and just as many others make it a requirement for granting your loan. It’ll be one of the clauses in the seemingly-endless stream of paperwork you’re asked to sign during the purchase process. While the banks will try to sell you their own life insurance as part of the package, you’re not obliged to accept that, just because your bond is with them – check out your options, because there are always better, simpler deals out there.
Insurers like Sanlam Indie match up to 100% of your monthly premium and pay it into an investment account – which could cover all those additional fees you were grudgingly required to pay up as you made your dream home, a reality.
It’s hard to think about making smart choices right now, but despite the chaos and panic, choose to plan for yourself and your family in the future.