Do you have a lot of concern around your financial planning right now? You have done and are still doing the right things – like you’re saving for your retirement and you’re also paying for a membership to a medical scheme.
These two financial products are two which we understand well and kind of adopt early into our lives; usually when we start earning an income. The older we get, we start taking on more financial commitments – home loans come into the picture and car loans. For those with limited resources, it can be pretty stressful deciding what is most important, made all the more difficult by providers vying for our attention to offer us even more important products.
What financial planners reckon are important ones
Some financial planners were asked what their approach was if they were to tailor advice for their clients. It was considered that any extra money should be saved in a tax-free savings account, which could supplement, say, the retirement savings; maybe to invest in unit trusts.
It was also strongly advised that for any of the financial products above, that a will should be drawn up by a lawyer or by a Trust company. It is important to have a will; one that meets certain legal requirements, making it valid. Simple errors, like allowing a beneficiary in your will to sign as a witness, can result in that person being disqualified from inheriting.
Let’s look at what they considered as critical ones
1. Medical scheme membership, as well as gap cover
Many financial planners reckon you have to belong to a private medical scheme as a top financial need. Yes, medical aid might be expensive but the financial consequences of being without one can cripple you financially. You can limit your cover to investing in a hospital plan. Without a private medical aid and care, you actually leave yourself open to being dependent on state facilities.
2. Unit trusts RA
Your employer might have a group retirement scheme, but you should consider increasing your contributions to the max if you can afford to. You can set yourself up with an RA; essentially a private retirement fund. A suggestion is a unit trust-based RA. You can choose which funds to invest in.
3. Income protection
This insurance protects when you become disabled and you are at great financial risk, putting you at risk without any income, perhaps, for many years. It is critical to protect your income so you are not dependent on others. An income protection policy will pay you out after a certain waiting period – the longer you wait for the policy to pay out the lower the premium. This product is quite an involved and intricate part of insurance, so it is best to get advice from a financial planner who knows the products well, to make sure you are properly covered.
4. Life cover
Life insurance is a core requirement for working people who have mortgage bonds and even more so, when there are young dependents. Maybe it is not so urgent when you are single and debt-free. If you have a partner and children, life cover can offer immediate financial support, and life cover can be used for wealth creation too. The exact amount of life cover you choose will depend on your circumstances and lifestyle. Here is a good review of SA’s top life insurers.
5. An emergency fund
It is always advised by financial planners to save up for a rainy day; for times of crises. Because without access to funds in the event of an emergency, one is often in desperate need to take out a personal loan.
Thank goodness they are there. In times of unforeseeable events, you will be so relieved to be able to access your emergency fund to lean on in times of need, like when your car suddenly seizes up, or your dog becomes suddenly ill, or you need to take an urgent flight; that type of thing.
The times we are living in at the moment are perhaps the right warning signals for both young and old to think about; their future, into the future – top financial products that reputable SA financial institutions can offer you, for peace of mind.
6. Funeral cover
Did you know that funeral plans are the most prevalent now in South Africa – all for good reason. Being able to provide a worthy and dignified send-off for a loved one is held in very high regard in many of the South African communities.
The calls you see coming through the call centres echo these views, and it’s seen on a daily basis. Millions of South Africans are hugely impacted by the insurance solutions sold, and the funeral cover, particularly, gives them peace of mind for the immediate financial relief offered and to include a dignified funeral for their loved one. Here is a good review of the best funeral covers in South Africa.
Watch this space for updates in the Opinion category on Running Wolf’s Rant.
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