Since the beginning of the year, South Africa has seen a succession of interest rate increases,
putting financial strain on individuals and families across the country. In light of this difficulty, many people are actively looking for methods to cut back on spending and make budget adjustments to get through these tough times.
It is critical for consumers to remember that they should always notify their insurance provider if they are having difficulty making premium payments. To help consumers engage in effective conversations with their brokers or financial advisors, we have compiled a list of practical tips to assist them in saving money and reducing their insurance premiums effectively:
Ensure that there is Insurable interest – If you are going to be taking a funeral policy or already have an existing one, ensure that there is insurable interest. The principle of insurable interest is normally satisfied if the parties are closely related and the beneficiary of the cover would suffer financial loss from the insured person’s death, such as spouses, children or parents. If insurable interest is not established during the claim stage, some insurance companies may refuse to pay the claim. To prevent being in this situation, make sure that you contact your insurer to clarify the matter.
Avoid taking out too many funeral Policies – The objective of taking out a funeral policy is to provide cover for the financial obligations arising from a funeral and not to profit from it.
Consumers must understand that while there may not be a set maximum number of policies you can have, there is, however, a maximum payout limit of R100,000 for each life insured. This limit is specific to the insurance policy held by a particular policyholder. Once this limit is reached, further payments will not be made, as stipulated by the Insurance Act. Hence Sections 8(1)(a) – (c) require a financial advisor to obtain appropriate information from the client regarding his/her financial position. The financial advisor is required to conduct an analysis based on the information provided, provide the client with adequate advice and identify financial products that are appropriate for the client’s risk profile and financial needs.
Review your insurance – By regularly reviewing and updating your insurance policies, either annually or whenever there are changes in your circumstances, you can evaluate if your insurance requirements have shifted, leading to potential savings through policy and premium reductions.
Updating your information can be either changing jobs or moving homes, which both affect the
underwriting of your insurance. Consumers should keep in mind that it is critical to check their policies on a regular basis, reassessing their relevance and altering them as needed.
While cost-cutting strategies are vital, it is also critical to consult your insurance provider and receive advice suited to your specific circumstances. More importantly, consumers should not hesitate to ask questions about the policy or any terminology they do not understand.