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Planning to FAIL: Four reasons why young people need to stay insured, even when times are tough

22 October 2021 Metropolitan
Tharshan Moodley, Virtual Distribution Lead at GetUp

Tharshan Moodley, Virtual Distribution Lead at GetUp

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.

Tharshan Moodley, Virtual Distribution Lead at GetUp - Metropolitan’s fintech offering aimed at digitally savvy consumers - says that difficult times are exactly when you need to stay insured. “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 very much 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 that their household income is still negatively impacted because of Covid-19, while Trading Economics revealed that youth unemployment teeters at a staggering 64.40%, as of Q2 2021.

Moodley says that instead of setting yourself up to FAIL by cancelling your insurance, rather reframe the word positively, by reminding yourself exactly 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.”

GetUp’s subscription-based insurance solution, Atom, features a cover stretch benefit that allows one to keep their plan active for up to one year when times are tough, through redeeming ‘Cover Stretch tokens’, which offer an opportunity to miss a pre-defined number of premiums while still retaining some level of cover.

“You really don’t want to waste all of the money you have been paying over a period of time by foregoing your cover when you might really need it. Rather than cancel your insurance, consider possible avenues that will allow you to retain your cover while still 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,” says Moodley. The International Labour Organisation recently listed a number of 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,” says Moodley.

Quick Polls

QUESTION

The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?

ANSWER

Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
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