Guiding consumers since 2009

Tips for affording your insurance premiums

By Danielle van Wyk

“Many South Africans have to adjust to doing more with less because of rising interest rates, fuel, and electricity and food prices. Since January this year, the South Africa Reserve Bank (SARB) has raised interest rates by a combined total of 75 basis points,” stated CEO of FNB (First National Bank) Life, Lee Bromfield.

This, in addition to stiff inflation that is still on the rise, and tariff increases that have affected staples like milk, bread, electricity and fuel, consumers are starting feeling the pinch.

It is in these tough times that consumers tend to cut back on important expenses like insurance cover, to alleviate financial pressure, marked Bromfield. This however, only places even greater pressure on people in the long run and exposes them to greater financial risk.

“It is not ideal to stop paying your life or funeral cover premiums because you could lose all your benefits, with no refund of the premiums you have been paying since the beginning of your cover. Look at other options to help you save a bit more money to afford your premiums and other household necessities,” stated Bromfield.

Below are a few tips Bromfield suggested to better manage payment of your premiums:

-Small lifestyle changes: One could consider avoiding peak traffic or opting for most cost-effective ways to travel like making use of public transport. This could see you saving a great deal in terms of fuel expenses.

-Shop wisely: “Always pay attention to retail specials for household necessities such as food. Sometimes it is cheaper to buy certain goods in bulk to last you a few months,” Bromfield added.

-Make use of loyalty benefits: These days most retailers have implemented loyalty programmes. This has even extended to the banks, as they have taken to rewarding people for using their cards instead of cash.

“Familiarise yourself with how these programmes work to be able to save a bit more,” advised Bromfield.

-Limit your wastage: Playing open cards with your family and especially your kids is sometimes the best way to save. Instead of buying expensive toys and lunches and engaging in expensive activities, being transparent with your family allows them to better understand that they need to maybe prepare their own lunch and entertain themselves indoors. This alleviates pressure from you in the long run.

Bromfield further explained that with better financial discipline, you can afford your premiums and thus avoid putting your family in a potential difficult financial situation in future. “For now, consumers have to cope with tough times and only those who make better decision will survive the current period.’’

Defaulting on payments

Most life policies make provision for the customer to default on payment once, and then be liable for a double premium the next month.

Considering that life insurance premiums tend to be relatively cheaper than most forms of insurance, we encourage consumers to take proactive steps to ensure that they plan ahead to keep their cover in good standing,” said Bromfield.

The issue arises, however, with back-to-back defaults, as this could lead to the policy lapsing.

“This is one of the reasons we introduced the measure of checking policy lapses against the national population registry because in some cases, funeral policies lapse because people have deceased. In such cases, we are able to pick up and try to track their beneficiaries for a pay-out,” Bromfield noted.

He added that every insurer abides by their own criteria, and this is also product dependant.

“That said, a reliable record is always important in assessing the risk profile of applicants of financial products - the manner and degree to which this is done varies,” Bromfield concluded. 

Recent Articles

Featured Get personal with your finances – and tie the knot

As time passes, your financial products may not live up to your needs. Therefore, it’s important to take stock of what you’re paying for and adjust where necessary. We got in touch with financial advisers to find out how you can get your finances in order, and what you should do to ensure you’re financially stable.

Personal loan or business loan? The best way to finance your business

When starting your own business, you may have to rely on external funding. Perhaps you qualify for a personal loan, but would it be better to take out a business loan instead? We got in touch with a specialist to find out whether it’s best to take out a business loan or a personal loan to assist you with your ongoing business or start-up.

What to do when you’ve been denied a home loan

After months of scanning property sites and attending showhouse after showhouse, you’ve finally found what you’ve been looking for. But your dream of owning a home comes crumbling down when you receive the news that you’ve been denied a home loan. So, what now?

Best travel cards offered by top South African banks

Planning a trip abroad involves a lot of administration. You need to consider travelling arrangements, reasonable accommodation, and a daily itinerary. But have you considered how you’re going to pay your bills once you arrive? Besides considering bank costs, you also need to consider exchange rates.

Deals

Takealot January Big Sale

Price: Available on request
When: Until 31 January 2020
Where: Online

Annique Restore Package Special

Price: From R600
When: Until 31 January 2020
Where: Centurion

Ster-Kinekor Senior Citizens Discount

Price: Available on request
When: Daily
Where: Nationwide