A conversion option allows you to buy a new life cover, without having to go for a medical examination, if you suddenly realise you need it. You need life insurance to pay for all your debts when you die. These could include your mortgage bond, car finance, overdraft facilities, sureties and credit cards. When buying life cover, bear in mind future debts such as increased living expenses and the education of your children. As you get closer to retirement, if your children are educated and off your hands, and all your debts have been settled, your need for life insurance diminishes.
Some people also buy life cover to pay for estate duty when they die.
This is only necessary if you do not have the cash reserves in your estate to pay the tax. If you want to leave your family with more money than they would need to survive, you should rather pay that extra amount into a pure investment than into a life insurance policy. A general rule of thumb is that you need eight to 10 times your annual salary for your family to maintain their standard of living when you die. On top of this you need insurance to pay off debts. For the purpose of the example, we will say they total R300 000.