Three steps to include sufficient risk cover in your budget

Times are tough. The ever-increasing cost of living and growing inflation is eating away at household budgets. South Africans are desperately trying to make ends meet under the current economic conditions.

Sadly, for many households, the first thing that gets cut from a budget is short- and long-term insurance cover.

Many South Africans understand the importance of insuring cars, houses, appliances and even mobile phones. However, we fail to understand that often the cost of short-term insurance is much higher than life insurance – even though your life determines your ability to earn an income and pay for the assets you buy and insure.

When financial challenges arise, consumers tend to panic and make drastic financial decisions in order to maintain their lifestyles. However, when it comes to maintaining you and your family’s lifestyle, your life insurance is vitally important. If finances are already tight while you’re able to earn an income, think about what would happen to your family if something happens to you; your income stops and your life insurance payments have lapsed.

So, to help you maintain your lifestyle and keep your risk cover in place, Kobus Kleyn, Liberty Financial Adviser shares three powerful budgeting techniques. 

  1. Focus on increasing your disposable income

A good budget must nurture responsible financial habits. This includes, wiser spending, increasing your income or a combination of both. Creating more disposable income should be about spending less and not about keeping up with the Joneses. Kleyn believes that implementing new financial disciplines, making sacrifices and being disciplined is essential to budgeting success.

  1. Get the help of a good financial adviser

Sticking to a budget can be challenging. If you’re struggling to make sense of it all or find yourself drowning in debt, then you need to consult a good financial adviser. Kleyn says, “Financial Advisors can help you through the hard process of reducing debt levels while creating “good” debt, to allow you to further grow your finances.”

  1. Take a long-term approach to your planning

Now that you and your adviser covered every detail in your budget, you’ll be pleasantly surprised to find that you can indeed reduce your spending while maintaining critical risk policies. There are advisers who take a long term view on helping you first to first take control of your finances before selling you risk products.

Kleyn says, “These ‘long-term advisers’ focus on advice first. This is a mutually beneficial arrangement because the adviser makes sure that you can afford to take out cover and maintain your policies over the long-term.”

To successfully make room in your budget to cover your risk, you must appreciate the need for insurance and the protection it offers. Kleyn explains that Financial Advisers must help clients to understand that none of us are indestructible and that life events can and will happen. “Too many consumers believe that the unexpected could never happen to them or their families, but the statistics prove otherwise. Once reality sinks in they will appreciate how vital it is to close the gaps within their financial plans to ensure adequate risk cover.”

Remember, if at any point you require assistance with covering your lifestyle risks; speak to an accredited Liberty Financial Adviser about a flexible and comprehensive solution – Liberty Lifestyle Protector.

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