Why financial planning needs to include risk cover

 Most people think of financial planning as just a numbers game, focusing on investments, savings, and retirement goals. While all these need to form part of your financial planning, there’s one part of the equation that often gets overlooked or sidelined, and that’s the question about what happens to the plan, the money, and the people you care about if something goes wrong.

According to Cornel Basson, Product Head at FNB Life, this is one of the biggest blind spots in personal finance. “You can have a great investment strategy, but if you die, become disabled, or face a serious illness, your financial plan suddenly doesn’t matter as much as whether your family can survive the setback.”

For many South Africans, such survival in the face of personal disaster isn’t possible. For instance, if a parent dies or can’t work, there often isn’t enough saved up to cover even the basics like groceries, school fees, bond repayments, and medical expenses. “This isn’t because people are careless in their planning,” says Basson. “It’s just that most people don’t realise how expensive life becomes when you’re not in a position to earn an income anymore.”

He points out that risk cover, which includes life insurance, disability protection, and critical illness benefits, is designed for exactly that. It doesn’t grow financial resources; it protects them. And in an economic environment where most household budgets are already taking strain, that financial protection is not optional, it’s essential.

According to Basson, one of the common misconceptions is that financial planning is about choosing between investing and insuring. “You need both because they serve different purposes,” he explains. “Investments grow your future. Insurance protects it.”

He points out that disability and critical illness cover are most often overlooked, even though they have become more relevant and important than ever as healthcare costs keep climbing and medical schemes don’t always cover what people assume they will. “We’ve seen many of our clients needing to fund treatments themselves - sometimes in amounts of hundreds of thousands of rand - because their medical aid excludes certain cancer therapies, for example.”

He also highlights that, even if the hospital and treatment bills are covered by a medical aid, there are often hidden costs that come with illness, like time off work, transport needs, lifestyle adjustments, and childcare. “Some of our clients who were undergoing chemotherapy could only work half days,” he explains, “and that means half a salary, even though expenses keep piling up.”

And while medical aid helps, it doesn’t always pay in full, often leaving shortfalls. Gap cover can help bridge those gaps, but critical illness cover plays an equally important role in providing financial support when it’s needed most.

But the challenges extend beyond just financial shortfalls. Basson notes that modern risk cover needs to account for the real-world complexity of how many crises actually take place. "If a parent needs time off to care for a critically ill child, there should be automatic support built into their insurance policy. If someone faces fertility challenges after cancer treatment, there should be funding available to freeze sperm or eggs. And if a policyholder becomes critically ill, premiums should be waived for a decent amount of time so that cover doesn't lapse when it's needed most," he explains. "These types of value-added cover aren't optional extras, they're caring responses to how people actually live, and what they face when things go wrong."

A big challenge for most people and families is not knowing how much cover is actually enough. “Once you start talking in millions of rands, most people lose the ability to fully comprehend the numbers,” says Basson. “They think R2 million in life cover is a lot, until they realise they still owe R1.5 million on their bond, and their kids have 14 years of school and university to get through.”

To address this knowledge gap, FNB has built a life cover calculator that is available on the FNB App. It uses basic personal data like income, dependents, and medical aid status to estimate how much life, disability, and critical illness cover an individual really needs. Often, this number is bigger than most people expected or can afford immediately, so the calculator also works in reverse. You simply enter the monthly premium you can afford, and it shows what level of cover that will get you.

“It’s not about selling a product,” Basson emphasises. “It’s about giving people a realistic view of the risks they’re exposed to, and then helping them find a starting point. The simple truth is that your financial plan shouldn’t just work when life is good — it should also hold up when things go wrong. Reliable risk cover from a trusted insurer can help ensure your plan does exactly that.”

It’s important to speak to a qualified financial adviser who can assess your individual needs and guide you toward appropriate cover. This content is for informational purposes only and does not constitute financial advice. Always review product details and disclosures from your insurer before making any decisions.

PERSONAL FINANCE