HOME BUSINESS INSURANCE, DO I NEED IT?

So you have started a new business from home, it’s still small beginnings and you wonder to yourself: “What risks are involved that I would need business insurance if I am working from home and have no premises to worry about?”.

5 WAYS TO MAKE YOUR FINANCIAL GOALS ACHIEVABLE

As 2014 has rolled over into 2015 people have invariably affirmed some New Year’s resolutions, but did you know that around one out of four people abandon their resolutions after one week! Seven days is all it takes to swerve off course.

RECOVERY MONEY

Unless you've already had a debilitating illness, the last thing you think about is your health failing you for anything longer than your hospital stay. As a result, we tend to only include a hospital plan, and perhaps some GAP cover in our financial planning. But what happens if the accident means that you can't work for six months?

Your hospital and GAP cover may take care of most of your in-hospital expenses (costs incurred whilst you're admitted), but how will you cover your monthly costs?

Difficult as this subject may be, stats show that we’re all going to have an unexpected brush with some major illness at some point in the future. It might be you, it might be your partner, or it might be someone close to you that you will need to support.

For many of us a tragedy of this magnitude it will have a profound effect on both our physical health and on our financial health. The wise question to ask is: how do I keep paying the bills when I'm ill?

Well, let me share the solution with you about a real breakthrough in our financial planning artillery. No, it’s not just 'another insurance product'... it’s so much more.

DON'T THROW YOUR MONEY AWAY

The number of people who are currently saving is declining, research shows. Last year MasterCard conducted a survey to discern consumer purchasing priorities and the research revealed that saving is a forgone priority in an increasing amount of household budgets.

The biggest barrier-to-entry in any budget for savings is the belief that there is no ‘extra’ money to save, and as a result, the money is channelled into commodities, accommodation, groceries and other expense pockets. In most cases, however, this perception is not accurate and is based on emotions rather than true budgetary figures.

BUY OR RENT?

In an article published on Fin24 earlier this year, it was said that homes are expected to become less affordable this year (2014). John Loos, household and property sector strategist at FNB Home Loans, said the following:

"After six years of improving residential property affordability, 2014 could be a year in which this improving affordability trend is reversed mildly, and in which affordability becomes slightly more challenging," said Loos.

Now, I don’t sell Home Loans – so why is this of interest to me as your financial advisor? Simple. I’m here to help you invest your money wisely; whether it’s with me or not, that’s my métier. When I sit down with you, we don’t only talk about products and investment vehicles: we talk about life. We talk about challenges, family, work and opportunities on the road ahead. So right now, let’s talk about your choice in a home.

WHY DO YOU NEED A FINANCIAL PLANNER?

This question crosses the minds of most people, just moments before they meet up for coffee with their financial adviser – and it’s a good question!

This question can be answered in so many ways… so let’s answer it with a few questions:

• Would you service your own car?
• Would you diagnose yourself if you were ill?
• Would you fix your own laptop?
• Would you represent yourself in court?
• Would you get an unqualified person to prepare your company’s financial statements?

Okay, so you may be smiling to yourself if you answered yes to some of the questions above. If you’re a medical practitioner with a bachelor’s in commerce and economics, you grew up in a garage and you practice law from the local iStore, then there’s a good chance that you don’t need a financial adviser….

THE COST OF CANCER

Every year countries throughout the world dedicate the month of October to raising awareness around Breast Cancer. Cancer has increased exponentially and is, in many cases, treatable – at a cost; making cancer a life, health and personal finance issue.

There are very few families in South Africa that have not had one or more members diagnosed with some form of cancer.

Recently I read an email from Money Marketing that highlighted some of the statistics and implications of this disease on individuals and families in South Africa.

According to South African cancer stats for the insured population, 100 000 cases are diagnosed in South Africa each year with 60 000 deaths from cancer each year.

12 POINTS TO REDUCE YOUR FINANCIAL STRESS

END TWENTYTWELVE WITH THESE 12

You’ve heard of the 12-days of Christmas, a song that gets sung on almost every Christmas album ever released (except for Justin Beiber’s… not that anyone really cares). Whilst this traditional carol reminds us of twelve ordered ways to deal with Christmas, we’ve got 12 steps to help you significantly reduce your financial stresses!

REVIEWING YOUR POLICY (2)

A WISE CHOICE NOW PAYS OFF LATER

In my previous article I looked at the old-school approach to risk assurance policies and highlighted some areas of concern that the latest policies are trying to avoid.

The reason for this is because most life cover premiums are higher than necessary because you are sold an indiscriminate lump sum of assurance to cover many different needs with different values at different times of your life. Not only is this costing you too much, it is also probably inappropriate for your needs.

BrightRock, a comparatively new kid on the risk life assurance block, has made this claim.

It says that, as a result of the traditional “lump-sum” structure, your cover becomes increasingly unaffordable, resulting in your reducing or cancelling it in later years. Having paid from day one for the cover, you then sacrifice it at the very time you need it most.

The BrightRock claim follows the publication last year of research undertaken by True South Actuaries & Consultants, on behalf of BrightRock, which showed that many people who bought seemingly “cheap” life assurance when they were younger faced losing their cover as their premiums escalated above the inflation rate and became increasing unaffordable. So, if you missed last week’s article, just click on the older posts link below, otherwise, read on for some more information on the kind of features you should be looking out for in your policies.

WHAT TO LOOK FOR

The overview principle is that a wisely chosen policy is one that can adapt with your needs.

Each component of cover within your risk assurance policy should exactly match the behaviour and trajectory of each specific financial need you want to protect, Schalk Malan, executive director at BrightRock, says.

REVIEWING YOUR POLICY (1)

ARE YOU PAYING TOO MUCH?

You could save as much as 30% of the premiums you pay on risk life assurance – against early death, for example – by, in effect, changing your policy from one paying out a single large lump sum and priced for the maximum term, such as “whole of life”, to one covering each of your financial needs with a precisely matched duration of cover.

BrightRock, a comparatively new kid on the risk life assurance block, has made this claim.

It says that, as a result of the traditional “lump-sum” structure, your cover becomes increasingly unaffordable, resulting in your reducing or cancelling it in later years. Having paid from day one for the cover, you then sacrifice it at the very time you need it most.

And when you reach the stage where your cover becomes unaffordable, you may not be able to obtain more affordable cover, because you may have developed a health condition that makes you either uninsurable or that necessitates exclusions and/or premium loadings on your policy.

The BrightRock claim follows the publication last year of research undertaken by True South Actuaries & Consultants, on behalf of BrightRock, which showed that many people who bought seemingly “cheap” life assurance when they were younger faced losing their cover as their premiums escalated above the inflation rate and became increasing unaffordable.

WHAT TO AVOID

Schalk Malan, executive director at BrightRock, says there is a triple whammy for policyholders in the way most risk assurance premiums are calculated. The three big drawbacks are:

1. Low initial premiums: To attract new business in an increasingly competitive market, life assurance companies offer seemingly cheap premiums when you are young and unlikely to claim. But as you grow older and become more likely to claim, your premiums escalate rapidly.

PETROL PRICE RELIEF IN MAY

Whilst there are many factors that influence the market, the petrol price is one major indicator of the way things are, and the order of things to come.  The weaker the rand, the higher the price: the higher the unit price (per litre) the more goods and services cost to collect and deliver, which means an increase cost of all products and services. 

However, every few months we have been receiving a reprieve in the pump figures.  As all the local news channels have been reporting, "Consumers are likely to breathe a sigh of relief, albeit temporarily, as the domestic petrol price is set to decrease next week."

 "The implication for the man on the street is that despite a temporary reprieve from a decline in fuel prices, a weaker rand compromises the spending power of the consumer."

The first Wednesday in May will be the first petrol price drop after three consecutive increases totalling around R1.30 for a litre of 95 (prices differ from the coast to inland).  In January this year, the price decreased by 15c a litre to R11.86, but has since risen to the region of R13.20/l.