Welcome to the Pogir Group, we have over 54 years of expertise.

011 879 7200/7250
info@pogir.co.za

St Andrews Office Park
39 Wordsworth Avenue, St Andrews.

08:00 – 16:30
Monday to Friday

We make it our business to make it personal. Giving you lasting peace of mind.

Are you wondering whether you should keep your long-term insurance? Like many consumers, you’re likely feeling the impact of what has been described as a cost-of-living crisis in South Africa. Recent increases in the cost of fuel, electricity, food, and utilities are cause for concern. And unfortunately, as load shedding continues and industries are forced to hike prices to stay afloat, economic prospects are not likely to improve in the short term. As a result, some householders contemplate abandoning their long-term insurance as a money-saving measure, with the intention of taking it up again in due course. But, as tempting as that may seem, it’s a terrible idea. The truth is that the cost of being uninsured far outweighs the apparent short-term financial “benefits”.

Can You Still Afford to Keep Your Long-Term Insurance?

Some people tend to weigh up insurance in terms of it being a “want” rather than a “need”. Of course, anyone who has ever been in a crisis situation without the necessary insurance will quickly tell you that it is an absolute necessity. Maintaining you insurance is more than just a practical safeguard. It could literally mean the difference between economic stability and financial ruin in the event of an unforeseen disaster. Despite precautions, geysers can burst, homes can fall victim to electrical fires, and natural calamities like floods can occur, virtually without warning. And, of course, the importance of maintaining life insurance can’t be overstated. Doing away with your long-term insurance is a high-risk gamble that should be avoided at all costs. So, can you cater for the month-to-month cost of insurance?

The Impact of Inflation vs Salary

Across the board, South African employees are seeing very little in the way of salary increases or bonus payments that help offset the impact of inflation. There are several reasons for this:
  • Many employers are still recovering from the economic devastation caused by the Covid pandemic. They may be heavily indebted or bound to expensive occupancy or service contracts.
  • As power outages grow longer and more frequent, the costs of production rise, eating into company profits.
  • For industries reliant on import or export, the cost of doing business has increased sharply as the Rand struggles to maintain value.
  • Many businesses have been forced to downsize or curtail expenditure, purely as a survival measure.
Obviously, this means that many people now have less disposable income than they did previously. And for some, this may mean unavoidable but necessary lifestyle changes.

Less Insurance, More Defaults: A Sign of the Times

As a matter of course, South Africans are underinsured, particularly when it comes to life and disability cover. In addition, new statistics from the Association for Saving and Investment South Africa indicate a growing (and worrying) trend. Fewer South African consumers are buying risk insurance – and there are a growing number who have allowed existing policies to lapse. This is particularly true of risk policies where there is no accumulated fund value. This is not unexpected given the economic climate – but could spell real trouble for many consumers who are quite literally gambling on the safety of their property and their own mortality risk.

The Consequences of Cancelling Insurance

On every level, it makes sense to keep your long-term insurance. A prime example of this is life insurance, which is critically important. The unexpected could occur at any point – and if you should pass on uninsured, your family may face enormous unplanned-for difficulties:
  • They will have to pay for unsettled debts.
  • They will have to pay for practical arrangements like a funeral.
  • They will have to make financial provision for the income you are no longer able to provide.
The financial burden then extends to matters like schooling for your children, household expenses, and more. The lump sum payment provided by your life insurance policy can also be used for future family expenses like tertiary education. And when it comes to household and general insurance, the impact can also be severe. In certain cases – for example, where your house is still mortgaged, or your vehicle financed – being uninsured usually constitutes a breach of contract with the bank or lender. This can lead to serious legal consequences, including the withdrawal of your credit facility or the repossession of your property. Even in cases where a consumer allows a policy to lapse, then attempts to replace it at a later stage, there is usually a hidden cost too. Inevitably, premiums will be higher, and the applicant’s risk profile will have changed – so insurance may then be substantially more expensive. What, then, is the best way to maintain your long-term insurance?

Communicate With Your Insurance Provider

If you’re in a position where you’re genuinely under financial pressure, the first thing you should do is speak to your insurance provider. Many providers are well aware of economic conditions, and if there are ways of accommodating you, they will do so. Some solutions may include:
  • A needs analysis that enables a provider to restructure your insurance portfolio. This is usually based on a review of your assets and an assessment of your business, personal, or lifestyle requirements.
  • The appropriate reduction of a policy’s face value or amount you’re covered for. You’ll still be covered, but for a lesser amount, and you can then increase this again as your situation improves.
  • A payment pause (if permitted within the terms or allowances of your policy) which provides temporary relief. This may also take the form of a temporary premium reduction.
By communicating timeously with your insurance provider, you not only create the possibility of a workable solution to your financial needs – but have peace of mind in knowing that you are not unduly placing yourself at risk.

Insurance Expertise and Experience

At The Pogir Group, our approach to insurance is tailored to your specific needs and requirements. Our experienced consultants will guide you step by step through the options that best serve you, while ensuring that you’re kept informed throughout and that your insurance portfolio is maintained in line with your lifestyle. In addition to long-term insurance and life financial planning, The Pogir Group also offers tailor-made personal and corporate healthcare solutions, employee benefit programs, and expert wealth management. For more information, contact us today to arrange a no-obligation consultation. Pogir. Smart, with heart.