think-twice-before-changing-your-insurance Think twice before changing your insurance

Few things hold more value than your health and your ability to earn an income, right? Which is why being insured against risks that leave you vulnerable can bring great peace of mind.

Petrie Marx, Product Actuary at Sanlam, warns that before you make any drastic changes to your insurance, or if you are considering reducing it, that you consider the implications of your decision – as it may be the most expensive one you ever make.

He suggests asking yourself the following critical questions before making any changes:

What is the true state of your health?

Apart from your lifestyle, genetics play a big role in your health; check your family history to understand if you may be at higher risk of contracting a specific disease.

Are you vulnerable to any lifestyle diseases?

Take an honest look at your lifestyle. Do you smoke, or are you very unfit? How might this impact your health and income in the future? While you can change your habits with some hard work and dedication, it’s important to be realistic about your financial needs based on your current realities and choices.

Are you able to afford the cost of a long-term illness or disability?

If you don’t feel confident about this, consider that your insurance policies are meant to bring peace of mind. It helps to be realistic about life’s unexpected events, so do consider where payouts may be needed (and how much) to adequately support you, should illness or disability come your way.

Are you responsible for dependants in your life?

Whether it’s a child or a parent, if you have anyone who is dependent on you, consider that your insurance policies can provide for them should you no longer be able to work and earn an income.

Understand the long-term risk benefits of your cover

Your risk policies may have a host of different benefits, for example, tax-free payouts. To understand the detail of your benefits, speak to your financial adviser and consider these benefits as part of your financial plan.

When you’re struggling financially, it may be tempting to relinquish insurance policies. But Marx warns against this approach. “It is better to prioritise the types of protection you need most, and take less cover than none at all.”

If you’re in any doubt about what to do with your money when you fall on hard times, it’s best to contact an accredited financial adviser. They could help you in tough situations to ensure you still have the cover you need to fall back on while ensuring your premiums are affordable until you get back on your feet, concludes Marx.