The purpose of life insurance is to protect your family from the premature loss of your working life’s income and free them from financial worry after the trauma of your death.

Later in life, if your savings and investment plans have been properly worked out and adhered to, you should have a steadily increasing net worth. Eventually, your investments should be large enough to ensure a comfortable life for you and your spouse in the absence of that monthly salary cheque. This would mean that you no longer require life cover.

The reality, however, is that most of our mature clients (in their late 50s and early 60s) have more life cover than they had when they were 30, which often doesn't make sense.

Even more ludicrous is the fact that you can only ever get one ‘benefit’. If you die before the policy matures, your heirs will receive either the death benefit or the cash value (the greater amount) but not both. If you mature the policy the cash value will be paid out and your death cover will be cancelled. And by the way, if you are young and have no dependants or debt, you do not need life cover — who are you going to leave the money to? Rather invest the money for your future.

So, to avoid falling into a lifetime of life cover trap, your goal should be to become wealthy enough to be self-insured long before you retire. If you keep your life insurance and investments separate, your family will receive both in the event of your death. Pure life assurance cover is very affordable way to hedge your risk and no young family should be without it while you are building your wealth.