The next few months beginning in April will be challenging for consumers as households start feeling the financial pinch from increasing living expenses.
From April, consumers will pay nearly 10% more for electricity and some municipalities will adjust water and sanitation rates that property owners pay. In addition, the fuel price is expected to rise by 98 cents per litre of petrol, with diesel projected to increase by 70 cents per litre. This will ultimately impact the cost of goods and transportation that the average South African cannot survive without.
Lee Bromfield, Chief Executive of FNB Life says unfortunately these costs are unavoidable for most households and may force some to cut expenses in areas which could prove detrimental in the short, medium and long-term.
“One of the common trends we observe when consumers feel a financial pinch is that they skip insurance premiums for certain months and hope to catch-up over the next month. In some cases, consumers will cancel a policy entirely and hope to take it up later when their financial situation improves,” he says.
“Consumers should avoid cancelling their insurance policies as this has dire implications for their long-term financial well-being. Although not advisable, you can still recover after missing a premium for one month with some insurers, provided you are able to catch-up over the next month, however, missing consecutive premiums could cause your policy to lapse,” he adds.
FNB Life recommends the following measures for potential financial relief during tough financial times:
- Review your budget: You’ll be surprised how much you can save by being diligent in monitoring and tracking your expenses. Make this a weekly exercise to see what you spend your money on and which items are necessary.
- Consolidate your life insurance under one provider: Consumers who hold several policies with multiple providers are inevitably going to pay more due to administrative costs. Consider covering your family under one policy to pay one premium. For instance, with FNB Life, you can cover up to 21 family members under one policy.
- Choose debit order to avoid skipping repayments: It’s much easier to see what has or hasn’t been paid when all your payments come-off one bank account. This helps you to stay on top of every obligation and minimizes the risk of mistakenly skipping a payment.
- Revisit your policy: If you had a loading or an increased premium on your policy as a result of health conditions or dangerous habits, you could approach your insurer to reconsider the premium if your health has improved significantly or when you no longer take part in the dangerous hobby i.e. drinking and or smoking
While cancelling an insurance policy may seem like the easiest option to relieve immediate financial pressure, you need to avoid losing all your premiums for short-term relief.
“The next few months will be financially demanding for consumers, and the impact will be much more pronounced among those who are living on or below the breadline. We encourage all consumers to avoid potentially worsening their financial situation by making short-term decisions that could have a far-reaching impact,” concludes Bromfield.
FNB provides customers with tools to improve and navigate the road to financial fitness. Accessible on the FNB App, the nav» Money tool provides an updated view of the customers financial health.