Plan your f inances as if you ex­pect the un­ex­pected

Weekend Argus (Saturday Edition) - - GOOD WEEKEND - Cape Times, Mon­day, Oc­to­ber 26, 2009.

It hap­pens in an un­avoid­able, ter­ri­bly vi­o­lent sec­ond. thought I had missed an out-of-con­trol meat re­frig­er­a­tion truck that had smashed head-on into the car in front of me.

But the force of that im­pact whipped the back of the truck into the air, swing­ing it across the road to crash down on to my car, di­rectly above my wife, Lynne.

In the most hor­ri­fy­ing min­utes of my life, I knew she had to be dead. There was blood ev­ery­where; Lynne was not re­spond­ing, trapped un­der the pounded down roof.

What hap­pened next is now a bit of a blur. But the im­mense sense of hav­ing lost the per­son who brings me great hap­pi­ness ev­ery day was re­placed by enor­mous re­lief when Dr Vick­ers Nien­aber told me that Lynne had a pulse.

Dr Nien­aber, you and your wife, Ezileda, are real Sa­mar­i­tans. I will be for­ever grate­ful to you both for do­ing so much for Lynne and the other in­jured.

I will al­ways re­mem­ber with thanks all the oth­ers who helped, most of whose names I will never know: the po­lice­man who chased away the ab­hor­rent tow-truck driver; the emer­gency med­i­cal team at the MediClinic in Stel­len­bosch who had to deal with what looked like a scene from a bat­tle­field; neu­ro­sur­geon Charl Vorster, who is the most unas­sum­ing but pro­fes­sional med­i­cal prac­ti­tioner I have yet met; and the many kind, car­ing and pro­fes­sional staff of ward D at Medi-Clinic.

Lynne es­caped with a se­verely frac­tured skull and mul­ti­ple cuts and bruises. Thank­fully, she is now on her way to re­cov­ery.

LIFE-CHANG­ING UP­HEAVAL

Lit­tle did we think when we set off for Stel­len­bosch on Satur­day two weeks ago that we would be­come part of a news­pa­per head­line. Even less so did the John­son fam­ily – Quin­ten, Clara and their three young daugh­ters – who were on their way to a fam­ily wed­ding. They took the full force of the on-com­ing truck. Quin­ten, who worked as a ma­chin­ist for SA Dis­tillers in Stel­len­bosch, was killed when the truck smashed into his door.

The lives of Clara and her brave daugh­ters have been changed fun­da­men­tally. They suf­fered se­ri­ous in­juries, but th­ese will be noth­ing com­pared with what the fu­ture holds without their main bread­win­ner.

Later that day, five more peo­ple were killed in an­other head-on ac­ci­dent at the ex­act spot on that black rib­bon of death that claimed the life of Quin­ten. I do not know who they were and how many peo­ple will be af­fected by that ac­ci­dent.

I do know that there will be mis­ery. I do know that there will be fi­nan­cial hard­ship. I do know that the lives of many peo­ple will be dif­fer­ent now and into the fu­ture. I do know that it could eas­ily have been you and not Lynne, and not Quin­ten.

All those killed and in­jured that day were part of a head­line in the Cape Times on Mon­day morn­ing. News­pa­per head­lines are how most peo­ple think of mo­tor ve­hi­cle ac­ci­dents: im­per­sonal; things that hap­pen to other peo­ple. Most of us be­lieve that we will die in old age and plan ac­cord­ingly, but the re­al­ity is that many of us in our vi­o­lent and of­ten law­less so­ci­ety will die pre­ma­turely.

I have asked my­self a num­ber of ques­tions over the past two weeks, in­clud­ing how many of us will not die peace­fully and how many of us who are not “youth­fully im­mor­tal” will pre­pare for the un­ex­pected. The an­swer to the sec­ond ques­tion is very few.

LIFE AS­SUR­ANCE ES­SEN­TIAL

Last year, Per­sonal Fi­nance pub­lished the re­sults of re­search by Due South Ac­tu­ar­ies & Con­sul­tants that showed that South Africans are dra­mat­i­cally un­der­in­sured against un­timely death and/or be­ing un­able to work be­cause of se­ri­ous dis­abil­ity.

In other words, most of us be­lieve that we will not meet un­timely deaths, that we will not leave our de­pen­dants with in­suf­fi­cient fi­nan­cial re­sources to main­tain their stan­dard of liv­ing and that we will not con­demn the peo­ple we claim to love to a life­time of mis­ery.

For the past two weeks, I have been crit­i­cis­ing the life as­sur­ance in­dus­try for some of the in­fe­rior, ex­pen­sive in­vest­ment prod­ucts it sells. Do not con­fuse this crit­i­cism with risk life as­sur­ance, which pro­vides fi­nan­cially should you die pre­ma­turely or be un­able to work as a re­sult of a se­vere dis­abil­ity.

In your fi­nan­cial plan­ning, risk life as­sur­ance comes be­fore any­thing else, par­tic­u­larly if other peo­ple de­pend on you. At least once a year, you should check whether you have enough risk life as­sur­ance.

You may be for­tu­nate enough to be­long to an oc­cu­pa­tional re­tire­ment scheme that has risk as­sur­ance, and you may think that this risk as­sur­ance will be suf­fi­cient. The bad news is that in most cases it will not be enough, par­tic­u­larly if you have de­pen­dent chil­dren.

OTHER THINGS TO CHECK

There are other things you need to check, such as:

Have you drawn up and signed a will? Dy­ing without a will cre­ates all sorts of prob­lems.

Have you named or up­dated the ben­e­fi­cia­ries of your life as­sur­ance pol­icy? Even if you have, check them again, be­cause I have come across too many cases where life as­sur­ance sales­peo­ple have named them­selves as the ben­e­fi­cia­ries.

By nam­ing your ben­e­fi­cia­ries, the money will be paid di­rectly to them, pro­vid­ing them with cash im­me­di­ately af­ter your death. Your es­tate will not pay ex­ecu­tor’s fees on the ben­e­fits, be­cause the money will not be paid into your es­tate.

Have you named or up­dated the ben­e­fi­cia­ries of your re­tire­ment an­nu­ity fund and/or your oc­cu­pa­tional re­tire­ment fund?

Al­though the fund trustees make the fi­nal de­ci­sion on how your ben­e­fits will be al­lo­cated, you can speed up the process by nam­ing your de­pen­dants and ben­e­fi­cia­ries on the ben­e­fi­ciary nom­i­na­tion form.

Have you con­sid­ered set­ting up a tes­ta­men­tary trust, which will come into ex­is­tence on your death to pro­tect your chil­dren’s fi­nan­cial in­ter­ests, par­tic­u­larly if both their par­ents die si­mul­ta­ne­ously? Such a trust may make all the dif­fer­ence to the fi­nan­cial se­cu­rity of your chil­dren.

You could eas­ily be the next vic­tim of an out-of-con­trol meat re­frig­er­a­tion truck. I did not think I would be and nei­ther did Quin­ten John­son.

Fi­nally, I would like to say to every­one who sent mes­sages of sup­port to me and my wife in par­tic­u­lar that we re­ally ap­pre­ci­ate your con­cern and your thoughts. Thank you.

Cameron is the au­thor of Re­tire Right (Ze­bra Press), which is avail­able in good book stores.

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