With the cost of living increasing as well as rising interest rates South African consumers are under a lot of financial pressure.
Sonja Oosthuizen from Standard Bank Insurance said that the financial pressure has resulted in people looking for ways to save as much money as possible and cut down on their expenses, including insurance premiums.
“In these tough times, everyone is looking for ways to save. If you’ve been toying with the idea of cancelling your insurance cover and revisiting it sometime down the line, you may want to reconsider,” Oosthuizen said.
“Ultimately, being insured protects you and your loved ones from potential financial ruin.”
Long-term insurance statistics from the Association for Saving and Investment South Africa shows fewer risk policies were bought in the first six months of last year, and a high number of policies lapsed.
While life insurance may not seem necessary now because there is no immediate benefit, people who don’t have life insurance may leave their loved ones saddled with overwhelming financial responsibilities.
After you die, life cover will pay out your dependants which they can use to take care of outstanding debts and day-to-day expenses such as food and transport, as well as the big expenses such as home loan repayments and funeral costs.
Oosthuizen advises people to reach out to their insurers instead of cancelling their insurance to understand what their options are to make their insurance more affordable.
This is also true for other policies, including vehicle, home or funeral cover.
“If you can’t afford the payments, don’t do away with your insurance entirely. Instead, start by contacting your insurer about payment options and potentially restructuring your policy following a needs analysis, which is a review of your assets, business, lifestyle, and family considerations,” Oosthuizen said.
People who cancel their insurance policies should also keep in mind they could face higher premiums when they are able to take out insurance again because of lifestyle changes.
Insurance providers are now starting to offer flexible options that will make it more affordable for people to pay their insurance policies, including a payment arrangement, premium holiday, cover reduction or alternative products.
Oosthuizen said: “By cancelling your insurance, you are placing yourself in a vulnerable position should anything happen to you, your possessions, your home or your vehicle. No insurance means no protection in the event of a fire, storm damage, an accident or theft.”
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