Homeowners feel the heat
“Most South Africans were not sorry to see the back of 2018,” Goemans comments. “The year was challenging to say the least - a technical recession, increases in VAT, petrol and food prices, economic and political uncertainty have all put consumers under increasing financial pressure.”
Of course, there is a silver lining. There have been some expressions of cautious optimism, but for the most part, it seems that economic recovery has not arrived yet.
This puts homeowners still paying off their bond under strain – particularly as interest rates are expected to rise in the future, further affecting home loan repayments. The growth in house prices has also slowed, with real house prices (ie adjusted for inflation) declining.
Protect against the unexpected
When under financial pressure, the rational response is to cut down on spending. Many people are tempted to take a gamble and cut down on insurance, as it is a cost that doesn’t show its value immediately. But, losing this gamble can have severe consequences in rough times.
“Now, more than ever, it’s important to protect you and your family against the unexpected,” Goemans adds. “For homeowners paying off a bond, for example, our Mortgage Protection Cover can be all that keeps a family from losing their home. If the bond payer dies, the outstanding balance is paid off.”
The alternative in many cases would be for the family to sell the family home. This will likely be an additional trauma following close on the loss of a loved one. And, it would be a potentially slow and difficult process in the current market.
Innovative insurance that adjusts cover according to your outstanding home loan balance could save homeowners up to 35% on premiums
Room to breathe
It remains important to keep insurance in place even in challenging financial times. Do your homework and seek better deals without compromising your cover.
Goemans comments, “Often innovative insurance companies find ways to give their customers room to breathe. Investec Life's Mortgage Protection Cover on Investec Private Home Loans, for example, offers a premium auto adjustment feature, the first of its kind in the country. It adjusts a client’s premium according to the amount outstanding on a bond.”
In the present climate, with interest rates set to rise, it is often advisable to pay off a bond as quickly as possible, putting any additional funds into the bond to reduce interest.
“As the amount paid off increases, our Mortgage Protection premium may decrease. This adjustment can represent a potentially substantial saving of between 20% to 35% in premiums, when compared to traditional cover in the market. Alternatively, if you access your bond, the Mortgage Protection premium increases.”
Buying a house is an important milestone and represents more than just an investment – for many it is an emotional attachment, the foundation of their security and a lasting home for their family.
“Our aim has always been to personalise life insurance for our clients to suit their life stages and offer flexible protection options,” he concludes. “Whether it is for life cover, disability cover or severe illness cover, we want to make sure our clients are prepared for the future.” While the economy is bound to bring challenges at times, planning and adequate cover can offer protection against the ups and downs.
If you’re an Investec Private Banking client, you have exclusive access to Investec Life. We bring you life insurance that is individually tailored to protect what is most important to you, with flexible insurance solutions as unique as your life. Apply online or speak to your Private Banker.
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