Petrie Marx, Product Actuary at Sanlam Risk and Savings
This year has brought ‘reality check’ moments to many, given the tenuous state of the economy, ongoing power outages, and rumours of more rate-hike-linked retrenchments. Major life milestones frequently lead to financial introspection and reassessments, according to a survey by Sanlam Risk and Savings. If your clients have experienced big life events – like becoming a parent, losing a loved one, or losing a job – in 2023, the chances are they are rethinking their priorities. The year’s midway mark is the perfect moment to do so.
Petrie Marx, Product Actuary at Sanlam Risk and Savings says, “The middle of the year is the perfect time to check in with your clients and ensure their needs are holistically addressed.”
When The Reality Check Moment Hits
It often takes a “reality check” moment to convince someone to re-evaluate the reasons they might not have the cover they need.
Marx says, “These moments are often exciting milestones, like becoming a parent (33% of survey participants cited this as a reality check moment), buying a home (23%), or getting married (15%). Sadly, they also include reality checks such as divorce (8%), losing a job (29%), a death in the family (24%), or a familial illness (14%). These wake-up calls often occur when we least expect them. That’s why it’s imperative to help your clients plan for the worst while hoping for the best.”
Financial reality checks come in all forms, including:
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Starting Their Career
The first job is one of the biggest milestones and one that should encourage people to think about their cover. Marx says, “When someone starts their first job, they have roughly 40 earning years or 480 pay cheques ahead of them. The risk of potentially losing their ability to earn an income would come with a devastating impact. For clients in this position, income protection or disability cover is of utmost importance. Additional death cover can also be put in place to avoid burdening their family with student debt.” Young people need to be empowered to access affordable income protection options to enjoy greater financial confidence.
Getting Into A Serious Relationship
Starting a serious relationship can have far-reaching implications for your client’s finances. This could include combining their finances, buying a home together, getting married, and having children.
Marx says, “For clients experiencing this reality, it’s imperative to discuss covering their debt with credit life insurance and additional death cover, with long-term debts like a mortgage and short-term debts like credit cards and personal loans all being considered”. For many, becoming a parent is the biggest reality check moment. Having death cover and sufficient income protection as well as disability cover ensures peace of mind.
Illness and Disability
Illness can strike at any point in life. Without the necessary protection, dealing with an illness can become even more challenging due to added financial pressures.
According to Sanlam Individual Life’s 2022 claims statistics, 73% of sickness claims are paid to clients younger than 45 years. 56% of disability claims and 58% of severe illness claims were paid to clients younger than 55 years old, with cancer as is the biggest cause of severe illness claims. These statistics show the importance of having sufficient cover in place throughout your life and not just when you are older.
Marx concludes, “South Africans are facing immense financial pressures and it can be daunting to juggle day-to-day needs, let alone plan for life’s curveballs. Help your clients to plan for their futures by assessing the risks they face and helping them to manage these in the most cost-effective way possible.”