Financial wellness: How to manage your risk

Financial Wellness: How to Manage Your Risk

You may not know your way to financial wellness and how to manage your risk. In this article, we will show you how.

But imagine you are building a solid and sturdy house. You wouldn’t just focus on the aesthetics; you would also want a solid foundation to keep the house standing tall for many years. Similarly, when it comes to your financial life, having the correct insurance will act as that strong foundation, ensuring your financial well-being for years to come.

Correctly structured insurance acts like a safety net for your money and future. They protect you and your loved ones from unexpected events and financial challenges that could otherwise shake your financial stability. Let’s dive into why they are so important and how they work in easy-to-understand terms.

In his article, “Financial Wellness: How to Manage Your Risk“, we will discuss the following points:

1 Why Long-Term Insurance Matters?

2 What types of cover should I consider?

1. Why Long-Term Insurance Matters

Protection for Your Loved Ones

Long-term insurance, like life insurance, ensures that your family won’t be left struggling to make ends meet if something happens to you. It provides financial support to your loved ones, helping them maintain their quality of life.

Protection for Your Future

Long-term insurance can also cover events such as disability, impairment or suffering from a critical illness. Having a comprehensive policy in place means that you are financially secure during uncertain times and can look after yourself and your family in these unforeseen circumstances.

Peace of Mind

Knowing you have insurance in place gives you peace of mind. You can rest easier knowing that your family’s future is secure, even if you’re not there to provide for them.

Debt and Expenses

If you have debts, like a bond or personal loans, long-term insurance can cover those so that your family doesn’t inherit your financial burdens. It can also help with day-to-day expenses.

2. What types of cover should I consider?

There are different types of covers available with a variety of service providers. Chatting with your financial advisor for guidance on which products are best suited to your individual needs is important.

Across all insurers, the core covers are directed at covering your needs in the event of death, temporary & permanent disability, and critical illnesses.

Life Cover

This assists with many situations after you have passed away. If you have a lot of debt or a large bond, this can mean that your family can keep living in their family home after your passing. No grieving family wants stress about keeping a roof over their heads.

It can also be used to look after the family’s month-to-month expenses. In households where one spouse is the majority or sole breadwinner, and this spouse passes away, it can leave the remaining spouse and children in a stressful situation. This benefit can be invested with professional guidance to provide a monthly income.

Disability Cover

We ensure our cars and homes, with the idea that they are high value if not our biggest assets. What if I told you that your ability to earn income is your most asset? Without your income, there would be no car and no home.

In the same way, we insure our vehicles against unforeseen circumstances, and we should insure our incomes for the same. Being without a car due to an accident or theft will leave you in a challenging situation. Being without an income due to an accident or illness would leave you in an even worse position.

Whilst life cover is for the people you love, disability and dread disease cover are to look after you.

Income protection is such a valuable form of cover, especially for young professionals. This essentially insures your salary, so if you cannot work due to a disability or impairment, this benefit will kick in, and you can continue providing for you and your family.

Disability cover can also be taken up as a lump sum to settle large debts like a bond.

Dread Disease

Critical illness cover is there to assist with any financial challenges that arise after suffering an illness. Many people overlook the risk of this happening to them, but the reality is that this can occur at any age. Suffering from a severe illness may lead to loss of income due to time off work for treatment or recovery, which may also make it challenging to keep up with your monthly expenses.

Once your emergency funds are depleted, you might create debt to look after yourself.

While good medical aid and gap cover are necessary, they aim at medical expenses and only go far. Having a comprehensive dread disease cover in place means that you are better prepared for unexpected medical expenses not covered by your medical aid, such as homecare during recovery and home modifications due to a change in your living conditions.

Long-term insurance provides financial stability and protection for you and your family. They ensure that your financial house remains strong no matter what challenges life throws your way. Just as a solid foundation supports a sturdy house, these financial tools support your long-term financial well-being. So, consider them as essential tools for securing your financial future and giving yourself peace of mind.

How would you rate your financial wellness? Do you manage your risk?

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