How our calculations work

Methodology · Last reviewed June 2026

MoneyZap is a financial education tool. Every figure it shows is an estimate based on clearly-defined assumptions and the information you enter — it is not financial advice, and it is not a recommendation to buy, sell, or hold any product. This page sets out exactly how each calculation works, so you can understand the numbers, question them, and discuss them with a registered financial adviser.

Income tax (SARS 2026/2027)

We use the official SARS tax tables for the 2026/2027 year of assessment (1 March 2026 – 28 February 2027).

Rebates: Primary R17,820; Secondary (65+) R9,765; Tertiary (75+) R3,249.

• Effective (average) rate = total tax after rebates ÷ income.
• Marginal rate = the rate on your next rand of income — used for amounts taxed at the margin, such as interest earned on investments.

Life cover — the LIFE method

We estimate the life-cover need as Liabilities + Income replacement + Final expenses + Education, then subtract the cover you already have.

L — Liabilities

The total outstanding balance of your active debts (home loan, vehicle finance, personal loans).

I — Income replacement

• We start with household monthly expenses and subtract debt repayments — those debts are settled separately under Liabilities, so counting them here too would double up.
• We then apply an 80% survivor ratio (a household typically needs around 80% of its prior expenses after one member passes away).
• That annual need is capitalised to your retirement age: the lump sum that, invested today, would replace it each year until retirement.
• The lump sum is assumed to be invested conservatively (stability matters to a survivor), so we discount at a real, after-tax return — roughly a 10% nominal return, less your marginal tax rate (the return is mostly interest, taxed as income), then adjusted for about 4.5% inflation. Because tax already sits in the return, we do not separately gross the income up — that would tax it twice.

F — Final expenses

Funeral costs (R50,000), plus executor's remuneration (3.5% of estate assets + VAT = 4.025%), plus estate duty. Each asset's estate treatment (set on the Investments page) decides what applies:

• In my estate — executor's fee and estate duty.
• Life wrapper (beneficiary nominated) — no executor's fee, but still estate duty (the proceeds are "deemed property", Estate Duty Act s3(3)(a)).
• In a trust — neither (the trust owns the asset, not you).
• Retirement annuities fall outside the estate for both.

Estate duty is 20% of the dutiable estate up to R30m and 25% above, after the R3.5m abatement (s4A) and deducting debts. A bequest to a surviving spouse defers it (s4(q)) — tick "Estate passes to my spouse" on the Insurance page to model that. Whatever an asset's estate treatment, it still counts as an available resource in the cover-sufficiency check.

E — Education

A guide of R500,000 per dependent towards school and tertiary costs.

Is your cover enough? — assets and retirement

The need above is then tested against what your family could actually draw on, so the recommended cover reflects your real position rather than a gross figure:

• Available assets reduce the need. Your discretionary investments (unit trusts, ETFs, shares, TFSAs, other property) are subtracted from the need. Your primary residence is excluded — the family must live somewhere — and retirement annuities are excluded here, because they are matched to the retirement step below.
• An optional retirement top-up. Because the income replacement only runs to retirement age, we separately check whether the survivor's retirement is funded — using two buckets that are taxed differently. Your retirement annuities grow tax-free (12% to retirement, 10% in drawdown, contributions continuing), but their income is taxed at the over-65 rates — so we use the after-tax income the RA can sustain to age 90. Any shortfall against the survivor's need is covered by a top-up of life cover, which — as discretionary capital — grows after-tax (12%/10%) but pays out tax-free. The top-up, discounted to today, is added to the recommended cover, and is toggled by the "Accommodate for shortfall in retirement funds" checkbox.

The result is a clear verdict: either your assets and existing cover are sufficient, or a specific additional-cover figure.

Disability & income protection

We estimate the monthly benefit need as 100% of your monthly expenses (you are still alive and supporting the household), capped at 75% of your gross income — the maximum insurers will typically cover, since a tax-free benefit above your take-home pay would remove the incentive to return to work. These benefits are tax-free in your hands, so no tax gross-up is applied. The extra costs disability can bring — care, medical co-pays, home or vehicle modifications — are not loaded into this monthly figure; they are conventionally covered by lump-sum disability and dread-disease cover alongside it.

Dread disease (critical illness)

A guide figure of 5× your annual income as a lump sum towards treatment, recovery, and lifestyle adjustment.

Retirement & tax-efficiency limits

• Retirement-annuity deductions: up to 27.5% of income, capped at R350,000 per year.
• Tax-free savings: R36,000 per year, R500,000 lifetime.

Key assumptions at a glance