Your life insurance plan can help you sufficiently safeguard your wealth planning needs – here’s how

Why is estate planning so important?

In the last quarter of 2021 it emerged that an estimated 1.3 million South African government employees do not have a will and a will okay.

This represents between 80% and 90% of civil servants, many of whom are parents and manage single-parent families.

Many are also homeowners. Unfortunately, not having a will also extends to the wider society.

For several years, it has been estimated that around 70-75% of South Africans in all occupational sectors are unwilling.

This is the heart of why estate planning is so important.

“People need to understand how important a will is,” said Harry Joffe, Discovery Life’s Head of Legal Services.

“A will or real estate plan isn’t just for the wealthiest members of society. Everyone, regardless of the income bracket you fall into, are subject to the same legal processes when you die. In fact, people with smaller assets from a patrimonial point of view often have more complex properties when it comes to liquidating them. “

“The reality is that the consequences of not having a valid will or an ongoing wealth transfer can be devastating for the family that is left behind. Quite simply, it can make things more complex, tax inefficient, expensive and emotionally more exhausting than the experience has to be, “she adds.

What can happen if you don’t have a will and estate plan?

Joffe explains: “Essentially, you lose the opportunity to decide who should inherit what and how much. Your estate will be distributed in accordance with South African succession law and not necessarily in accordance with your personal wishes.

By taking that very important first step: where to start

The best place to start is to seek the experience of a qualified professional.

“A real estate attorney, trust company or specialist real estate company is best suited to this difficult and administrative-intensive service,” comments Joffe.

“So have experts on hand to help you meet your needs and structuring a holistic wealth plan supporting you in the best possible way is the perfect place to start, ”he adds.

Benefits of using life coverage as a wealth planning tool

Life insurance can effectively help you provide much-needed liquidity in your property, while also creating opportunities for you to assist your executor in the faster liquidation of your property.

One of the primary functions of life coverage is to provide financial security and asset (money) protection to your family and other beneficiaries when you are no longer able. It essentially offers cash liquidity through the payment of death, serious illness or disability benefits.

To do this, your plan or policy needs to clarify what your priorities and goals are and match them to your assets, liabilities, risk tolerance, and other financial factors.

This creates a strategy that can be of great support as a wealth planning tool within your larger financial plan.

Some benefits of using the life coverage plan to improve the legacy you leave include:

  • Being able to maximize the real value of your wealth to care for those who matter most to you. “One way to do this is to create a trust, which is a highly effective asset structuring tool and can be used for dealing with many complex family structures fairly and advantageously as long as the right administrators are present, “explains Joffe.
  • Be able to provide for your spouse while minimizing tax burdens. “A spouse who is a life insurance policyholder avoids the duty of inheritance, but does not provide money to the inheritance. A balance should be struck between leaving the assets to a spouse and ensuring sufficient liquidity in the inheritance.”
  • Being able to protect an inheritance in a controlled way. “A trust is a great way to set parameters that affirm control over how your inheritance is used by those you leave behind, especially if one of your goals is to provide for your existing family, as well as future generations. life-specific fund coverage can help protect your assets from numerous levels of wealth transfer and prevent assets from being squandered by heirs, ”says Joffe.
  • Be able to ensure the fair transfer of a business to the heirs / co-shareholders. “If you have a co-shareholder who is actively involved in your business, you may want him to be your successor. You may also want to pass on a fair inheritance between multiple family members who will continue to handle things. So, you can consider things like a structure and a buy-and-sell agreement and the protection of key people, both of which use life insurance. “
  • Being able to give back to society and specific causes that have meaning for you. “You can choose to have a specific charity or cause as the beneficiary of your life insurance plan. This way you can use the cover of life to leave a charitable gift that supports your passion for philanthropy. It’s a nice way to leave a lasting impact if that means as much to you as ensuring that your loved ones are financially secure too, and it’s also effective for lowering real estate duties, ”says Joffe.

Tune in to learn more about the importance of estate planning with The Discovery Life podcast series starring Bruce Whitfield.


Discovery Wills and Trust Services, a division of Discovery Central Services (Pty) Limited, a company registered in South Africa with registration number 2016/054628/07 and part of the Discovery group of companies. Discovery Life Limited. Registration Number 1966/003901/06, is a licensed and registered life insurer and financial services provider, NCR Reg No. NCRCP3555. Product rules, terms and conditions apply.