By Katlego Mei, CFP®

Over the years, I have realised how people enjoy discussing strategies to build and preserve wealth. It makes sense because it is a positive discussion. As people, we prefer to talk about our hopes, dreams, and aspirations. The conversation around planning for what could go wrong is often less enjoyable for people.

When it comes to securing your financial well-being, it is essential to plan for when life happens. Having insurance in place for unforeseen events is crucial. It is a critical part in a financial plan, as it helps mitigate the financial risks associated with unexpected events. It can be the difference between financial stability and financial disaster.

The importance of insurance

Without insurance, you are exposed to various risks that can have significant financial consequences. These risks include accidents, illnesses, and property damage, which can result in liabilities, medical expenses, and financial losses.

Insurance offers several benefits to help you mitigate these risks and protect your financial stability. It provides a safety net that enables you to recover from unexpected events without depleting your savings or going into debt. It also offers a sense of security and peace of mind, knowing that you are financially protected. Different forms of insurance coverage are available. Here are a few examples:

Life Cover can help you provide for your family if you are no longer around. You can use it to ensure the family home is paid off and all other liabilities are taken care of in the event of your passing. It can be the gift of a lasting legacy.

Income Replacement cover can help replace income that is lost due to injury or illness, allowing you to meet key obligations while you recover. If you have a permanent condition, this cover will provide you with an income until your selected retirement age.

Short-term insurance protects you from the financial impact of property damage or loss. These policies cover damages to homes, vehicles, and other assets, ensuring you can recover from unexpected events without financial hardship.

The above list is not exhaustive, but hopefully, it gives you an idea of the role that insurance plays in your financial plan. It is definitely not a bad thing; it helps you protect your assets and prevents your overall financial plan from derailing.

Once you have the right cover in place, remember to review your policies to ensure they remain aligned with your financial goals and circumstances.

In summary, insurance is an essential component of financial planning and does not have to be a grudge purchase. It is a mechanism you can use to protect your financial future.