father hugging daughter

Hold on to your cover in tough times: why and how

Posted  January 16, 2018

Putting your family first in 2018 means you need to keep your life, disability and dread disease cover policies. Secure financial protection for your loved ones should anything happen to you.

We’re all looking for ways to cut expenses where we can and to save a bit more in the new year. Every expense needs to be examined, but be careful of cutting expenses that turn out to be essential - like life, disability and dread disease insurance. You may not need it right now, but if you are serious about putting your family first and want to take care of them, you need to keep paying your premiums, even if it means cutting a few other expenses from your budget.

Why is life insurance essential? In a nutshell, life, dread disease and disability insurance take care of your family’s financial needs if you are no longer around or able to work and earn an income.

If you need more convincing ask yourself what would happen if you could no longer earn an income? How would your family cope financially? Could your children attend the same school or would they need to move to a school with lower fees? Would your family be able to keep their home?

Without an income or insurance pay-out your family may have to cut their spending dramatically if something were to happen to you.

Your insurance policy is good value for money When you are looking at your insurance premium, think about the income it could replace if you were no longer around, and compare this to the amount you are paying each month.

Let’s use an example of a R1 million life insurance policy with a R200 monthly premium. Keep on paying the premiums and if the unthinkable happens and you pass away, your beneficiary will receive a pay-out of R1 million. They could use this to pay expenses and invest some to earn a monthly income.

Without insurance your family will lose your income, and won’t have an insurance pay-out to replace it. Viewed in this light, R200 a month is very good value for money.

An insurance pay-out will never replace you, or make up for any loss your family suffers, but it can ease financial stress. If you stick with it for the long term, it will be there for you when you need it.

Taking an insurance break isn’t a good idea Ever had a month where expenses were higher than usual, and you have to decide which accounts to pay? We’ve all had these, but if possible, don’t make the decision to not pay your insurance premium for a few months. If you do, your cover will be cancelled.

It is possible to reinstate your policy, or take a new policy when your financial situation improves, but premiums are influenced by your age and health, so when you reinstate or take a new policy, you will be older (nothing we can do about that!) and your health may have changed. This could easily result in a higher premium and your R1 million life cover that originally cost R200 a month could now cost R300 a month. If there has been a change in your health and medical conditions since you first took out your insurance, when you take out a new policy you may find that there is a new exclusion where you are not covered for a particular condition.

Pay on time, every month If you don’t pay your premiums, your policy will be cancelled so you will no longer be covered, and if something happens, your family may struggle to pay their expenses.

Advice on how to hold on to your cover - even when times are tough

Keep your premiums low
So, you are determined to keep your insurance, but you’re looking for ways to keep your premiums low, or perhaps even reduce them. Speak to your insurer to find out more about these options:

  • Stop smoking: smokers pay higher premiums because they have a higher risk of disease and early death. If you were a smoker and haven’t smoked for a year, your premiums could reduce.
  • Be healthy: premiums are lower for those in a healthy weight range, for example. Losing weight is good for your health and good for your finances.
  • Adjust your cover: reducing the amount you are insured for will reduce your premium. This might not be the ideal situation, but some cover is better than none.

Talk to us!
Struggling to pay your life cover premiums? Need to cut costs? Contact us to discuss how we can tailor your policies in line with your budget - without compromising on the cover your family needs.

Spend your money on what you value most in life.

Cut expenses elsewhere
You know you should spend your money on what gives you the most long-term value and rather cut costs on other items, but where do you start?

Final thought Your family is one of life’s gifts. Treasure it while you have it, and make sure your family is protected should something happen to you. Keep your cover. Like your family, it will be there for you in the difficult times.

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