How to tackle one of the world's most taboo topics
A positive death movement is sweeping through the West - from death doulas and death labs to death cafes, fake FUN-erals and a WeCroak app! Yet, death remains one of the most taboo topics for many. Most of us don't like to think about it - let alone discuss it with loved ones. Of course, this has major implications, like the fact that over 60% of South Africans don't have wills. And 40% of SA's workforce is more likely to have cell phone insurance than life insurance.
Discussing death: First, have a conversation with yourself
Karen Bongers, development actuary at Sanlam Individual Life says," Sanlam's Conversations with Yourself campaign is a thought-provoking investigation of one big idea: what would you ask if you could have a conversation with yourself at varying ages and life stages? I think it's very pertinent to the topic of death, because you need to ask yourself the tricky questions before you can bring these up with your loved ones.
"Ask yourself what would happen to your family if you were to suddenly pass away. How can you make sure they continue to live a comfortable life? What opportunities do you want for your children and what steps can you take now to ensure that they can still have them, even if you were to die sooner than planned? Making financial preparations for your family and then talking to them about these is one of the most loving things you can do.
"Once you know what you want to bring up, then you’re ready to chat to your family."
Karen Bongers, development actuary at Sanlam Individual Life.
Things to think about when you have the conversation with your family:
Here, Bongers outlines some of the things to think about when talking about death:
* Aretha Franklin is one of the latest high profile celebrities to pass away without a will, which means state laws will govern the dividing of her estate. Without a properly drafted will, the deceased's wishes often remain unclear, which can cause confusion and draw out the process unnecessarily. Often no will also catalyses family fall-outs and can open a family up to harmful fraudsters. Conversely, if there is a will and it is drafted by a financial expert, there should be no misinterpretation of the deceased's wishes once he or she is no longer there to answer any questions. It is wise to store your original will with a reputable financial institution that offers such a service, like Sanlam Trust, and you may also want to let your family know where the document is kept.
* Life insurance is essential to ensure dependents are not left destitute and can continue to pay all foreseeable future living expenses. If there's insufficient liquidity, the family may need to sell their house, for example, to pay things off. On the flipside, if you have the conversation and ensure you have a sufficient amount of life insurance, the pay-out your family receives can enable them to maintain their lifestyle. This is often provided you also advise them to invest it responsibly, with the help of a trusted financial planner, to make it last. Also make it known how you would wish the pay-out to be used and invested - the advice you give could prove very helpful later on.
* From a legacy perspective, many inheritances are lost because parents fail to communicate with their children. It's important that frequent family discussions happen whereby wealth is discussed so upcoming custodians appreciate the value of their inheritance and how to handle it.
* If you know your partner and children are not the best at money management, gently bring this up in the conversation and make sure they're familiar with your financial planner or have their own trusted financial adviser so they're not left stressed out when you're gone.
* In South Africa, a large percentage of the population has funeral cover (often via multiple policies) but no life cover. Funeral cover pays out quickly and allows for multiple dependents BUT it comes at a cost. As it usually doesn't involve underwriting, it's significantly more expensive per R1 of cover. While it is meant to cover basic funeral expenses, underwritten life insurance, which is more cost effective, is meant to cover the bulk of a family's need in terms of paying off debt and covering future expenses.
When having the conversation, talk about what kind of funeral you might want and how much your family will need to achieve this. Then you can decide on the appropriate amount of funeral cover you might need, in conjunction with the underwritten life insurance product you choose. A financial planner is essential to help you determine an appropriate amount of life insurance for your particular needs. They will take your current financial situation into account and use projection tools and investment assumptions to arrive at a recommended amount of cover.
How to talk about death when you really don't want to
Bongers believes it's about being candid and realising you need to have the conversation more for your family's benefit than your own. "I think it's about knowing what you want to speak about in advance and then picking a moment when everyone feels relaxed and comfortable. Prepare your loved ones beforehand by telling them it's a conversation you want to have, explaining why it's important to you and why it affects them. Try and take everyone's feelings into consideration and maybe acknowledge from the outset that it's a tough chat to have. Stick to facts if it makes it easier and, if necessary, explain your decisions so everyone understands why you’ve made them."
Sanlam's Conversations with Yourself campaign discusses life insurance from the quirky perspective of questions you'd ask yourself, at six different ages and life stages. Drawing from this, here are some of the questions to ask yourself about your life insurance product:
- Do you have the right balance between funeral and underwritten life cover? Has a certified financial planner assisted you to determine an appropriate amount for each?
- Did you compare life insurance options to see how different premiums will increase over time? The cheapest option may turn out to be the most expensive in the long-term.
- Are you aware of any suicide exclusion clauses in your life insurance product? Do you know that if the product lapses, this clause typically kicks into effect again after the product is reinstated?
- Do you know what exclusions and loadings are on your life insurance product?
- Have you considered a cash back option? Is an earlier additional pay-out something you and your family could benefit from?