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Why your long-term insurance is essential during a recession

by | Jun 26, 2017 | Blog, Financial Planning | 0 comments

South Africa has experienced two consecutive quarters of negative economic growth. Gross domestic product (GDP) fell 0.7% in the first quarter of this year and pulled back 0.3% in the final quarter of 2016. The dampened growth is as a result of slower economic activity in construction, manufacturing and transport. While mining and agriculture experienced higher growth, this was not enough to offset the losses from other economic sectors.

Johan Minnie, Group Executive of Sales, Distribution and Bancassurance at Liberty explains that when the country is experiencing unprecedented levels of uncertainty, social and political unrest as well as economic hardship, you need to make sure that you are financially stable and protected to weather the storm.

The increasingly important role of a financial adviser

Minnie says, “When times are tough, it is important for Financial Advisers to show unwavering support to their customers. At Liberty we maintain our drive and professionalism because we know the difference a great financial adviser can make in the lives of our customers.”

According to Minnie, customers concerned about their financial future should not make any drastic decisions related to their finances. This is the time to tread carefully, batten down the hatches and protect your money and lifestyle as much as possible.

As the largest writer of new risk business in South Africa for the last 13 years, Liberty maintains that financial planning is an ongoing process of assisting customers to make sensible decisions to help them achieve their financial goals. “When economic factors change, you need to speak to your Financial Adviser. It is important to get tangible advice that will help you to maintain your lifestyle and achieve your goals.”

Five characteristics of a great financial adviser

  1. Qualified, experienced and knowledgeable about the markets
  2. Provides quality advice that is relevant to the customer’s goals
  3. Open, honest and always available to the customer
  4. Provides peace of mind and confidence through robust financial planning
  5. Nurtures a lasting relationship based on honesty, trust and professionalism

Treat your insurance cover as an investment

Minnie adds that now more than ever it is important for one to take insurance cover seriously. “Too many South Africans think about insurance as a grudge purchase, when it really acts more like an investment that cashes in when uncertainties arise and risks become realities. The last thing you should be doing is cutting your insurance cover while you wait for ‘the storm to pass’,” he says.

Financial Advisers have a key role to play in assisting customers prioritise spending, and create peace of mind and a sense of security. An Adviser can also ensure that adequate measures are put in place for the four essential pillars of risk – Life Protection, Loss of Income, Lifestyle Protection and Policy Protection.

“For example, Loss of Income and Policy Protection during a recession are essential. Business expansion slows because consumers spend less and businesses struggle. Retrenchments increase dramatically and unemployment becomes a serious problem. Being retrenched is not only emotionally challenging, it is also financially disabling.”

Understand cover

Liberty’s Retrenchment Protector protects customers against financial losses as a result of a retrenchment. The benefit provides the customer with their monthly sum assured for up to six months (after a one month waiting period) or until they find a new job. A maximum sum assured of R30 000 per month can be selected.

The Premium Protector Retrenchment benefit also pays the premiums of the risk benefits on an insurance policy for 12 months if the policyholder is retrenched and cannot find new employment within 1 month of their employment ending. Once a claim is paid, it will be paid for the full 12 months even if they are re-employed before the end of the 12 month period.



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Renette Zeelie

Tel: 018 786 1882

Fax: 086 617 8136


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