Make sure your finances are in order before braving the country’s roads
’Tis the season to be merry – but it’s also the season of tragedy. South Africa’s roads, more than at any other time of the year, turn into black ribbons of death and serious injury over the next two months.
By the end of this year, some 130 000 income-earners will have lost their lives, while an estimated 43 000 will be totally and permanently disabled. Many of these actuarially predicted cases of death and disability will be the result of road accidents, Peter Dempsey, deputy chief executive of the Association for Savings & Investment SA (Asisa), says.
Dempsey says that, with a week before corporate South Africa shuts down for the holiday season, now is a good time to reflect on your personal finances. He says life and disability cover should top your pre-holiday financial checklist. You need to ensure that you:
You should ensure that you have enough death and disability cover, he says.
“As an income-earner, it is your responsibility to make sure that your family is looked after financially should you die. In the case of disability, the additional financial impact of having to care for the special needs of a disabled family member no longer able to earn an income is often underestimated.
“If you do not have life or disability cover, you must see a financial adviser. It is important that you decide on the right level of cover with the help of a trusted financial adviser, as your decision will be influenced by how much you can afford to pay in premiums, your number of dependants, your lifestyle and your debts.
“If you do have life assurance policies, meet with your financial adviser to review the cover. Most people underestimate how much life and disability cover they require,” Dempsey says.
Ensure that you have completed the beneficiary nomination forms for your life policies, Dempsey says.
“If you do not specify a beneficiary, your life assurance proceeds will form part of the estate. Since your bank accounts will be frozen on death, your family will have to wait some time before they receive money, and only after all debts have been repaid by the estate.
“If you do have a beneficiary nomination in place, the life assurance company will pay out within days, provided the necessary documents have been submitted and no foul play is suspected in the cause of your death,” Dempsey says.
Check with your financial adviser or life company whether you have previously completed a beneficiary nomination form. If you have, ensure that your nominations are still relevant and that the percentages of the proceeds to be allocated to each of them are correct.
The Pension Funds Act states that the trustees of a retirement fund must consider all a member’s dependants, together with his or her nominated beneficiaries, when allocating a death benefit.
“When you nominate beneficiaries for your pension fund or retirement annuity, make sure you put down the names of all the people who are financially dependent on you. This will speed up the process of distributing the benefits and ensure that those who did depend on you financially continue to receive financial support. If your beneficiary nominations are incomplete or not up to date, it can take the trustees up to 12 months to finalise a payout,” Dempsey says.
◆ Dempsey says you will create complications for your dependants if you die without a will.
“If you have children, give careful thought to what should happen to them if you and your partner are killed at the same time. While this is one of the most difficult situations to think about, it is also one of the most important. Often, this decision will affect your beneficiary nominations,” he says.
◆ You should compile a list of the people who your family should contact in an emergency – one of whom should be your financial adviser.
Compile – and regularly update – a consolidated record of the details of your life assurance and shortterm insurance policies, investments, bank accounts, home and personal loans, and medical scheme membership, Dempsey says.
Make sure that family members know where to find this record.