What prompted your financial reality check? A recent survey of 900 respondents by Sanlam Individual Life showed that major milestones often lead to financial reassessments.
For 33% of respondents, becoming a parent was the reality check they needed to get their finances in order. Other reasons included losing a job or a death in the family.
At every life stage, there is a need to re-look one’s financial plans and risk cover. Insurance is a key aspect of any financial plan and so is the right advice. Having a professional in your corner will help ensure your needs are holistically addressed in every phase you move through.
There are several reasons people delay getting insurance, for example many feel the perceived risk of an unexpected event is too low or that cover is too expensive.
It often takes a “reality check” moment to convince someone to re-evaluate these reasons and put in place the necessary protection for the future.
These moments are often exciting milestones, like becoming a parent (33%), buying a house (23%), or getting married (15%). Sadly, they also include reality checks such as divorce (8%), losing a job (29%), a death in the family (24%), or a familial illness (14%).
These wake-up calls often happen when we least expect them. That’s why it’s imperative to plan for the worst while hoping for the best.
According to Sanlam Individual Life’s research, some of the most common financial reality checks are:
- Starting your career
One of the biggest milestones to consider when thinking about your cover needs is when you start your first job.
When you start your first job, you have roughly 40 earning years – or 480 pay-cheques – ahead of you, so the risk of potentially losing your ability to earn an income would come with a devastating impact. Income protection or disability cover is therefore of utmost importance. Additional death cover can also be put in place to avoid burdening your
family with student debt.
2. Getting into a serious relationship
Starting a serious relationship can have far-reaching implications for your finances. This could include combining your finances, buying a house together, getting married and having children.
When you get married or buy a house together, it is important to cover your debt with credit life insurance and additional death cover.
- Becoming a parent
This is perhaps the biggest reality check moment in life. Having death cover and sufficient income protection as well as disability cover becomes necessary to ensure that your children are provided for.
4. Illness and disability
Illness can strike at any point in your life and can affect your finances. One Sanlam client – a 50-year-old doctor – developed stage 3 breast cancer. Had she not been protected, this difficult time may have been even more challenging due to financial pressures. Fortunately, she could claim under her severe illness cover, which helped her manage financially while undergoing treatment.
Living confidently starts with something as simple as drawing up a monthly budget, assessing your risks and then seeking advice on how to manage these cost effectively. We understand the financial pressures faced by many South Africans. Our goal is to help people prepare for any eventuality so they’re financially prepared for any reality check moment.
By Petrie Marx
- Marx is product actuary at Sanlam Individual Life
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