The year 2020 came about with a great amount of hardships and offered critical financial lessons such as, having an emergency fund; the importance of budgeting and having sufficient insurance cover to protect yourself and your loved ones.
The New Year provides an opportune time for one to reflect, take stock and review their insurance covers to ensure that they are financially prepared to handle any unexpected turns this year.
The next few months are set to be financially challenging for consumers due to the brunt of the pandemic with expected petrol price increases, increased cost of living and more job losses. This might lead to consumers considering insurance policy cancellations as witnessed with past trends.
The importance of having adequate insurance cover
One common behavioral trend that we’ve observed year-on-year is that when consumers are faced with immense financial pressure they either skip insurance premiums for certain months or in some cases, will entirely cancel their policy and hope to take it up later when their financial situation improves.
The one key lesson that the COVID-19 pandemic has taught us is the importance of having adequate insurance cover.
If you have loved ones who count on you for financial support, your priority this year should be to ensure that you keep or upgrade your insurance cover, to protect yourself and your family should the unfortunate happen.
When COVID-19 struck, people were harshly reminded of the importance of having adequate health and life insurance cover.
The importance of retrenchment cover
While most people had to also dip into their savings and investments to run their households as a result of losing their jobs and businesses being shut down, the importance of retrenchment cover and credit life insurance was further reinforced.
We recommend the following measures for potential financial relief during tough financial times:
- Review your budget: You’ll be surprised how much you can save by being diligent in monitoring and tracking your expenses. Make this a weekly exercise to assess what you spend your money on, and which items are necessary.
- Consolidate your life insurance under one provider: Consumers who hold several policies with multiple providers are inevitably going to pay more due to administrative costs. Consider covering your family under one policy to pay one premium.
- Choose debit order to avoid skipping repayments: It’s much easier to see what has or hasn’t been paid when all your payments come off one bank account. This helps you to stay on top of every obligation and minimizes the risk of mistakenly skipping a payment.
- Revisit your policy: If you had an increased premium on your policy as a result of health conditions or dangerous habits, you could approach your insurer to reconsider the premium if your health has improved significantly or when you no longer take part in the dangerous hobby i.e. drinking and or smoking
While cancelling an insurance policy may seem like the easiest option to relieve immediate financial pressure, you need to avoid losing all your premiums for short-term relief.
The next few months will be financially demanding for consumers, and the impact will be much more pronounced among those who are living on or below the breadline. We encourage all consumers to avoid potentially worsening their financial situation by making short-term decisions that could have a far-reaching impact.