Instead of setting yourself up to fail by cancelling your insurance, remind yourself why it is important to stay insured when times are tough. File photo.
By Tharshan Moodley
Google “grudge purchase” and you probably won’t be surprised to see a slew of articles pop up that contain the word “insurance” in the meta tag.
There’s no denying that insurance can feel like a burden at the best of times, so when times are tough, cancelling your cover might seem like a reasonable move. Especially if you’re at the start of your career, young and healthy, and the chances of anything happening to you are slim, right? Wrong.
In periods of widespread hardship, such as a pandemic, you are far more vulnerable to financial crisis, meaning that if you lose your job or become disabled, for example, the chance of you recouping that income becomes that much harder.
And even as the vaccine roll-out gains momentum, things remain difficult for South Africans. Consumers’ finances are under pressure, more than a year and a half since the onset of the pandemic.
According to TransUnion’s latest Consumer Pulse Survey, 61% of respondents say their household income has been negatively impacted because of Covid-19, while Trading Economics revealed that youth unemployment teeters at a staggering 64.4%, as of Q2 2021.
Instead of setting yourself up to “fail” by cancelling your insurance, rather reframe the word positively, by reminding yourself why it is important to stay insured when times are tough. It starts with putting the basics in place and having access to trusted support to help you make a success of your finances.
F is for Family
Insurance not only protects you, it also helps to ensure that your family and loved ones are looked after should anything happen to you. You might not yet have children, but perhaps you look after a parent or another family member financially. If something happens to you, not only will they have to deal with the emotional devastation, they might also find themselves facing a whole lot of costs, which can lead to financial strain and is often the reason why consumers fall into a debt trap that is hard to exit.
A is for All those premiums – wasted!
You may have been diligently paying your insurance policy for some time, and then cancel it just before you really need it. Policies can also lapse when policy holders miss premium payments, so it is critical that you familiarise yourself with the terms and conditions on your policy.
You really don’t want to waste all of the money you have been paying by forgoing your cover when you might need it. Rather than cancel your insurance, consider possible avenues that will allow you to retain your cover while taking some breathing room.
I is for Income
You might someday find yourself facing retrenchment which, unfortunately, is far more likely to affect young people. The International Labour Organisation recently listed reasons why youth are hardest hit by the pandemic. This included the fact that young people are overrepresented in sectors most impacted by the lockdown; were more likely to embark in “non-standard” and less stable forms of employment; and were also at greater risk of having their salaries cut due to their relative inexperience.
Being covered, and having benefits that support you in difficult times, makes handling unforeseen events a bit easier, so that you can focus on finding employment.
L is for Legacy
Insurance can help you leave a legacy for your loved ones, by putting them on the path to building wealth. We work hard so that we can leave something behind, which will make the lives of those we leave behind and love better.
Tharshan Moodley is the virtual distribution lead at GetUp.
PERSONAL FINANCE
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