RISK BEN­E­FITS

Weekend Argus (Saturday Edition) - - GOODWINES -

You and your de­pen­dants could be placed at se­ri­ous fi­nan­cial risk if con­tri­bu­tions linked to your re­tire­ment fund are sus­pended or dis­con­tin­ued, John An­der­son of Alexan­der Forbes says.

Any re­duc­tion in con­tri­bu­tions could have an im­pact on risk ben­e­fits, mainly group life and dis­abil­ity as­sur­ance but also ex­tend­ing to things suchas fu­neral in­sur­ance.

Any im­pact would need to be part of your em­ployer’s ne­go­ti­a­tion and agree­ment with its em­ploy­ees.

An­der­son says an al­ter­na­tive to los­ing the cover al­to­gether would be to have your cover re­duced.

If your risk ben­e­fits are re­duced or lost, it is im­por­tant that you take out ad­di­tional or new in­di­vid­ual risk cover against death and dis­abil­ity to en­sure that you and your de­pen­dants are not left des­ti­tute if the un­ex­pected hap­pens.

The same ap­plies if you are re­trenched. Most peo­ple do not have suf­fi­cient risk cover even when they have group risk as­sur­ance. Loss of group risk cover may mean that, af­ter re­trench­ment, you have no risk life as­sur­ance at all.

An­der­son says if you are re­trenched you must es­tab­lish whether the provider of risk ben­e­fits to your fund pro­vides any con­tin­u­a­tion op­tions. Un­der such op­tions you would pay the pre­mi­ums your­self.

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