The cost of living and economic uncertainty are taking a toll on many of us. A recent study shows that, when it comes to personal finances, nearly 77% of South Africans are most concerned about inflation on everyday items.

In these times, reviewing your financial priorities becomes critical and your policies should be at the top of the list. While it might seem like a quick way to cut costs, cancelling your policies could leave you exposed to significant financial risks when you need protection the most.

Stian de Witt, executive head of financial planning at advisory firm NMG Benefits, says that having policies such as life cover is not just a safety net; it is an investment in your financial wellbeing and your loved ones’ future.

De Witt encourages everyone to partner with a financial adviser to understand their real risks, make sense of the available options, and tailor a solution that fits your budget without compromising on essential cover.

Below are some questions you need to ask when reviewing and revising your policies:

What are my risks? Consider where you are most vulnerable to financial loss. For example, your risk of being unable to work due to illness or disability is probably higher than you think and is much higher than your risk of passing away prematurely. During 2023, millennials (28-43 years old) were 55x more likely to claim on their income protection benefits than their death benefits, and this ratio was still high – at 17x – when looking at income protection versus death claims across all ages.

Do I need a short waiting period for income protection? If you own a business, or are self-employed, a listed salaried professional, independent contract worker or commission earner, a seven-day waiting period on your income protection could mean the difference between stability and struggle. Gig workers are also often under-insured so, if you are part of the gig economy, this should be taken into account.

Are critical illness shortfalls accounted for? Critical illnesses often lead to extra expenses, such as dietary changes or ongoing medical treatments, and your current income protection may not cover these adequately. Going forward, ensure that your policy includes benefits that help you manage these additional costs.

Does your policy provide for your dependents long-term? While lump sum payouts are useful for settling debts, they may not ensure consistent financial support for your family following your death. A life income benefit offers a monthly income for your dependents, safeguarding their financial future after you are gone. Again, your specific needs and circumstances need to be assessed before committing to a product. A good example might be that you prefer rental properties and then a lump sum benefit is better versus someone that does not want to deal with tenants.

An annual review of your policies gives you the chance to streamline your cover, ensuring it aligns with your current financial and risk situation. It can even result in monthly savings, which could help buffer other areas of your budget.

“When you have the right cover in place, you are not just protecting yourself. You are making the most of your available budget to safeguard your family’s future – the biggest investment you will ever make,” says De Witt.