Skip paying premiums at your peril says expert

INSURANCE company Liberty Life has cautioned policy holders to refrain from skipping their insurance premiums in the months they are short of money.

INSURANCE company Liberty Life has cautioned policy holders to refrain from skipping their insurance premiums in the months they are short of money.

Liberty Group advisory services actuary Farai Muronda says many people went over budget during the festive season and are now struggling to make ends meet.

If policyholders are tempted to skip premiums this month, it could have some devastating effects, Muronda cautions.

He urges policyholders to make sure that they make arrangements to pay their premiums to avoid the policies lapsing. Skipping just a single premium may disempower the policyholder in the future as they may lose their cover.

"When you decide not to pay for a policy, you are exposing yourself and your family to the very risks that your policy was designed to protect you from.

"Families have been left destitute because a breadwinner became disabled and had no way to replace their income because their disability policy had lapsed.

"There is a very real danger that the one premium you miss could be the one you regret," said Muronda.

Like many insurers, Liberty offers policyholders various avenues to continue their coverage when they are struggling with premium payments. It is advisable that, when hard times hit, policyholders should consult their financial planners for advice on how best to maintain cover instead of simply skipping premium payments.

With thousands of over-indebted South Africans contacting debt counsellors this month, now is the time to put things right and take control of your finances and your life.

Avoid making the same mistakes you made last year by budgeting and living within your means. Start reducing your debts while putting money aside for saving as soon as you get paid.

When you work out exactly how much you owe, ask yourself if you can afford to pay back all your various debts.

If you think you cannot manage speak to a debt counsellor to help you work out a payment plan.

If you save throughout the year then your end-of-the-year expenses will be manageable.

When the festive season strikes again, you will have some money saved up so you don't repeat the cycle of over-spending in December and suffer debt in the new year.

This will ensure that come January, you will be in control of your finances and your expenses.

Muronda's advice is to cut back on non-essentials but whatever you do, don't cut back on the essential lifelines of insurance and medical cover - you may live to regret it for the rest of your life. - Staff Reporter

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