PEOPLE who are struggling to make ends meet will be tempted to make rash decisions such as cancelling their funeral policies without thinking about the consequences.
Lee Bromfield, CEO of FNB Life, said given today’s high cost of living and econonic uncertainty, being surprised by a funeral, which can cost R30 000 or more, can be a nasty financial surprise.
Bromfield asked South Africans to answer a few questions before cancelling their policies:
Are you really saving? Premium payments are unlikely to break your budget. Funeral cover is currently one of the most affordable forms of insurance available.
For instance, an adult, aged between 18 and 64 years, can pay as little as R35 a month for a R10 000 cover.
What are the consequences? When your policy lapses, you will lose out on all the premium payments you had made.
Also, you and your beneficiaries will now have to finish a six-month waiting period for natural death, if you took up a new policy.
Have you adjusted your budget? Don’t cancel financial commitments you consider grudge purchases, but make a decision based on an evaluation of your finances.
Draw up a complete budget that separates needs from wants and establish what you can really do without. This helps you save by cutting luxuries and ensure that you have enough money reserved for your needs.
“If you can’t fix the problem, find expert advice.”
Do you have a plan B? Many people who have cancelled their policies, do not have an alternative and often turn to suspect lenders, such as abomashonisa, who sometimes charge up to 50% interest or more on a loan.
“If you find yourself having to make tough decisions due to financial difficulties, always weigh the consequences and alternatives available before taking drastic measures that can expose you to even higher financial risks,” said Bromfield.
