How to financially prepare for turbulent times
6 Feb, 2023

How to financially prepare for turbulent times

George Kolbe, Head of Life Insurance Marketing at Momentum

While we’re always hoping for the best and trying to remain positive, the reality is that life is unpredictable and filled with unexpected challenges. According to many analysts, the economic forecast for the year ahead in South Africa is looking tough, which will only be exacerbated by life’s unpredictable twists and turns. However, George Kolbe, Head of Life Insurance Marketing at Momentum, says there are ways to prepare for financial uncertainty by staying in the driver’s seat with your money.

Unfortunate events leading to serious illness, injury, disability, and even unforeseen loss of income, can occur at any time. “Ensuring you’re adequately covered for unexpected events is very important. Not preparing can directly affect your financial future.”

The 2022 Momentum UNISA Household Financial Wellness Index revealed that financially unstable households are less likely to have life insurance policies in place. Almost 70% of financially distressed households struggle to cover their monthly expenses, especially during unpredictable periods such as an environment of rising consumer price inflation and interest rate hikes.

George recommends the following ways to prepare for unexpected occurrences:

Make sure your income is protected

According to George, income protection cover can be defined as a long-term insurance policy that supplements or replaces your income in the event of a loss of income due to serious illness, injury, or disability. The aim of income protection is to safeguard your monthly income should you become temporarily or permanently disabled, with the objective of protecting your financial position.

As illustrated by 2021 claim stats, Momentum paid out R224million in income protection claims – with the biggest individual claim being a total cumulative amount of R6.3million. Musculoskeletal-, Covid-19- and nervous system related complications were the leading reasons for income protection claims in 2021. Most of the claimants were between the ages of 40 and 49, further cementing the importance of income protection, especially considering that this age group is still a long way from retirement.

Consider critical illness cover

Critical illness cover, also referred to as dread disease cover, is lump sum cover that pays out when a person suffers a qualifying critical illness, for example cancer or heart disease.

“Although critical illness coverage has grown in relevance over the years, it is still not as prominent as it should be and we still see too many clients with too little, or no cover in place,” says George.

In 2021, cancer and cardiovascular-related illnesses ranked as the highest causes for claims, highlighting the significance of critical illness cover as well as prioritising a healthy lifestyle.

Set up an emergency savings fund

Establishing an emergency savings fund is a great way to ensure you have money to cover smaller emergencies or unexpected financial challenges. A car tyre replacement is just one example of an unforeseen incident that may occur at any given time and requires some instant cash.

“You do not have to save an excessive amount of money upfront. Apply the winning formula by making it practical. Look at your budget and cash flow and commit to saving some money on a regular basis, or whenever you can, to create your emergency savings fund for a rainy day,” he says.

Preparing for unexpected life changing events like death or serious illness is essential, and should be done as a matter of urgency, if you have not done so already, as these events can happen at any time. For the best possible outcome, it is generally suggested that you approach an accredited financial adviser for a comprehensive financial needs analysis to help you identify financial risks and put solutions in place to address them.

George says not preparing for unexpected events can put your, and your family’s, financial success at risk. Comprehensive financial planning, which includes setting financial goals and protecting them, is the best formula to secure your journey to financial success.



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