Balanced Security: Pairing Life Insurance with Gold Growth

Future financial security is not only about protecting income through life insurance but also about building and safeguarding wealth through assets such as commodities. 

According to various sources, only one out of ten South Africans currently has life insurance. This highlights a major vulnerability, as approximately 90% of households would face financial strain if the main income earner were to pass away or become disabled, with no replacement income available. For families living month to month, this lack of protection can quickly turn into long-term hardship.

Building Wealth While Protecting Your Loved Ones

Life insurance provides a safety net, but pairing it with assets like commodities offers a more balanced approach to security. Life insurance remains essential in bridging the financial gap caused by the loss of an income earner, ensuring that dependents are supported when they need it most. 

Unfortunately, many households underestimate its importance or assume the premiums are unaffordable. This leaves them exposed to risks that could disrupt their stability. However, by linking life insurance to asset growth through solutions such as EasyProtect, investors can create a stronger foundation. 

EasyProtect is asset-aware, meaning that as investments grow, the gap narrows, and dependency on life insurance decreases over time. This ensures families benefit from both protection and growth.

One powerful asset class investors could consider in this equation is commodities, particularly gold. Over the years, gold has shown consistent growth in value, often outperforming inflation and serving as a hedge against market uncertainty. Gold prices are also expected to continue rising as central banks print more money, interest rates come down, and geopolitical conflicts intensify.  

As prices rise, investors benefit from capital appreciation, strengthening their financial position. This growth in assets could effectively reduce the required life insurance cover, since the increased value of the commodity can contribute toward future financial security for dependents.

Example 

Take Nickelon, a 30-year-old professional. At the start, he needs R2 million in life cover due to limited savings. He decides to invest R5,000 a month into a gold exchange-traded fund (ETF). Over 10 years, assuming gold performs well and grows steadily, his investment could grow to around R1 million. 

 This is a hypothetical scenario for illustrative purposes only and was generated using AI. Capital is at risk. Investment returns are not guaranteed. This does not constitute financial advice. Past performance is not indicative of future results.

EasyProtect, which dynamically adjusts cover based on investment assets, may then reduce his life cover requirement to around R1 million – potentially lowering his premiums. If the gold ETF begins to pay dividends (not all do), he could choose to use these to:

• Offset premium costs
• Reinvest them to build wealth

Roundup

Ultimately, future security lies in balancing both protection and growth. Life insurance provides certainty and peace of mind, while investing in assets such as commodities like gold could provide resilience against economic shocks and inflation. By combining the two, households could reduce their financial vulnerability and create a safety net that grows stronger over time. 

Rising gold prices, dividend opportunities, and asset-aware protection products, such as EasyProtect could all work together to ensure that families are not only covered for today but also positioned to thrive in the future. Even as retirement approaches and the need for life insurance decreases, accumulated assets such as gold remain a valuable store of wealth. Families continue benefiting from the growth and stability of commodities long after their reliance on life insurance has declined, creating true lifelong financial security.

Sources – EasyResearch.

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