There is no denying that 2020 has been a challenging year for South Africa. The COVID-19 pandemic has left a wake of economic strain and uncertainty among working individuals, budding small business entrepreneurs and large industries alike. The damage is done and the long term implications are still unpredictable which means that the average individual or household will undoubtedly be looking for ways to reduce monthly spending.

As South Africans come under increasing financial pressure, many are unable to afford to pay monthly premiums on policies such as life insurance, funeral cover and medical insurance. Although it is important to find ways to cut back on costs and only focus on the essentials, it remains critical to maintain your cover to ensure you and your family’s wellbeing and security. Now more than ever, as the nation battles the corona virus outbreak, it’s important to hold onto certain insurance policies and with a few changes here and there, it can be done.

Understand your Insurance
Insurance forms financial resilience against those big calamities you can’t fund from your own emergency funds.

Credit insurance has come into play in a big way during this period. Very few people are aware that they have credit insurance, something that has been essential during lockdown. It’s a wise idea to find out which of your loans has credit insurance in place and what the terms and conditions are.

People often cancel their car insurance when under financial pressure but accidents can still happen despite not travelling as often. It only takes one moment and you may find yourself without transport and owing the bank a lot of money. Rather shop around for better premiums or get your car re-evaluated every 2 years.

Life insurance is not just about death, but also about living through a crisis. People tend to forget that their future income is a big and important asset. Should you find yourself severely ill, disabled and have no family support, how are you able to earn an income? This is why it’s vital to review your policy and understand what it covers, the pay outs and so on.

Speak to your Insurance Company or Financial Advisor

Should you find yourself in financial strain during the COVID-19 lockdown, rather first communicate with your insurance company or financial advisor before making any short-term, rash decisions. For example, find out whether your insurer offers a premium ‘holiday’ in the benefits. Most companies allow for a 3 month grace period to catch up on premiums. Cancelling a policy with the idea of re-instating it a few months down the line means you’ll probably have to take out a new policy, which means new requirements, higher premiums and possibly additional loadings and/or exclusions. Rather first seek advice from an advisor on your options before you decide to cancel any policies.

Cut out Unnecessary Spending
Before cancelling policies rather first look at other expenses that could be cut back on. Start by analysing your spending to see where money is going and work from there. Maybe you can opt for a more economical TV entertainment package instead of the premium option. You could save up to R300 a month by cancelling your landline package and by choosing a cheaper cell phone model you could save up to R1000 a month. Minimising your grocery shopping to only one trip a week saves you money spent on petrol and on buying unnecessary food items.

Certain insurance policies are important to hang onto, even when under financial strain. Rather look at other areas where you can cut costs first, chat to your insurance company or seek advice from an advisor.

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