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IOL News
5 days ago
- Business
- IOL News
The hidden risks of life insurance policies
Discover the surprising truths about life insurance policies, including why they may become less valuable over time and how to ensure your family's financial security. Image: Pixabay Economist Azar Jammine did a little bit of investigative work recently, reviewing a life insurance policy. What he found was rather astonishing: it would pay more for the policy owner to die now because, in about a decade, the premiums paid would amount to more than the value of the policyholder's life in terms of the policy – the sum insured. Jammine, director and chief economist at Econometrix, tells Personal Finance that, in the case of this policy taken out in 2002, this is because the cost of the monthly debit order increases each month, yet the amount someone has insured their life for doesn't. Denise Gabriels, Lead Ombud at the Life Insurance Division in the National Financial Ombud Scheme, said that her office had received some complaints that mirror this issue. Between the late 1980s to early 2000s, insurance in the form of Universal Life policies, which were sold, which Gabriels said were based on a guaranteed period during which time premiums didn't go up, and then they would, either yearly or through an immediate steep increase. Gabriels added that, as the risk of dying increases, so does the cost of life cover. In cases where policies are 'age-rated, the premiums will go up while the cover amount could well stay the same, Wayne Mostert, MD of ASI Wealth, explained. In certain policies, especially permanent ones like whole-life or investment-linked life cover, it's possible to reach a point where you've paid more in premiums than the value you'd get out, he told Personal Finance. Izak van der Westhuizen, chief financial officer at BrightRock, pointed out that the younger you are, the healthier you tend to be, so your premiums will be lower because of a lower risk of claiming. Mostert added, 'Locking in a good rate in your 20s or 30s can save you a lot of money over time. Also, life has a funny way of throwing big responsibilities at us when we least expect it.' Only those who die young, it seems, are worth anything (and also good, based on one of Billy Joel's better-known songs). Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. 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Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Taking all of this into consideration, it may seem like life policies become worthless as you age, hinting at it being a better idea to invest in unit trusts. Yet, they are still an important part of a financial toolkit. Mostert said this concept, of taking the amount you would've spent on premiums and investing it in a unit trust or savings account, may seem good on the surface. 'But there's a catch: investment alone doesn't replace your income if you pass away unexpectedly. You might have some growth over the years, but if you died next week, your family would have only what you've saved – not the R1 million or more that a life policy might have paid,' Mostert said. Van der Westhuizen added that, while there is a chance something might not happen to you, 'you're paying the premium in case it does, much like with a short-term insurance policy. Your car might never get stolen or damaged, but you pay the premium in case it does.' Greg Smith, who is both co-founder and co-CEO of Dis-Chem Life, says: 'Without adequate cover, the financial ripple effects can be devastating. Families often struggle to afford essentials like daily living expenses, school fees or even maintaining their home. In contrast, having appropriate cover in place can provide a buffer of financial stability in times of crisis.' Mostert also noted that some other uses for life insurance are in business settings to protect partnerships or key staff members, such as enabling them to buy out the rest of the business. 'Some people even use it as security, or collateral, when applying for a bond. So yes, it goes beyond just death cover,' he says. However, death, like taxes, is inevitable. Pointing to US-based medical research centre National Institutes of Health data, which shows that 20% of deaths among South Africans aged 35 to 64 are caused by chronic diseases linked to lifestyle conditions, Smith said that the risk of death wasn't theoretical. Mostert added that many life policies in South Africa offer optional dread disease cover. 'This pays out if you're diagnosed with a serious illness like cancer, a heart attack, or a stroke. The money is usually paid as a lump sum and can be used for anything: from medical bills to helping you take time off work or even going on a bucket list trip if that's what you need,' he explained. There's also disability cover, which replaces your income if you can no longer work due to illness or injury, for example, said Mostert. Van der Westhuizen says a comprehensive life insurance policy should include income protection (temporary and permanent disability cover), critical illness cover, and death cover. 'Different types of cover protect different things, so a well-structured policy should include all of them,' it said. Worth noting is that, by law, insurers must hold a certain amount of capital to honour their claim obligations to all their clients, Van der Westhuizen says. 'To comply with these capital requirements, insurers must use certain investment vehicles. Our regulators strictly govern and enforce these requirements and the rules around how these funds are invested to ensure their protection.' Above all else, read the fine print and speak to a financial advisor is a message that always comes through clearly from Personal Finance's experts. PERSONAL FINANCE
CTV News
28-05-2025
- Business
- CTV News
How to keep your finances on track according to Canadian expert
We're kicking off Financial Fitness Week by looking at how you can evaluate your own financial fitness! This week marks Financial Fitness Week and CTV Morning Live looks into how to evaluate your financial situation to grow your net worth. The net worth is defined as the health check for your finances, according to personal finance expert and author Jessica Moorhouse. This includes your assets and liabilities. Moorhouse says that you want to see your net worth grow every month. This can be done through saving, investing and paying your debts, she adds. Emergency funds The most important thing when it comes to finances is making sure you have an emergency fund, Moorhouse said. 'When you think everything is going well, that's when something happens unexpectedly,' she said. 'Your car breaks down, your pet gets sick, you lose your job or your hours are cut. Something is always going to happen.' The rule of thumb, according to Moorhouse, is to have enough money to cover expenses for three to six months. She notes that most people do not have an emergency fund, citing having other priorities and not being able to save. Therefore, her first suggestion when meeting with new clients is to prioritize having that emergency fund. How to manage debt When it comes to debt, Moorhouse says it's usually an emotional topic that comes with shame, embarrassment and anxiety. There is always a way out, she notes. She suggests looking at the interest rates and trying to find the best repayment strategy. 'There are two important ones (strategies), the debt avalanche and the debt snowball. You either want to start paying off aggressively the one with the highest interest rate first, or do you want to tackle the smallest balance,' Moorhouse said. While the debt avalanche focuses on minimizing interest costs by paying off the debt with the highest interest rate first, the debt snowball focuses on paying off the smallest debts before moving on to the bigger ones, she explains. Cash flow vs spending Looking at the cash flow, which is the cash that comes in and the money that goes out, is very important to manage your finances, Moorhouse says. Though people look at how much they make per month, they don't necessarily look at their spending, she says, while suggesting tracking all expenses. 'It is important because we know that we (might have) spent a little too much on eating out. 'Or what was this expense? I thought I cancelled that subscription. Well, I didn't.' So, now I know cause that's my spending,' she added. The personal financial expert suggests aligning your spending with your goals and values. For example, if you want to go on a trip, she suggests cutting off on spending on take out coffees or eating at restaurants. More information is available in Moorhouse's book titled Everything but Money.
Yahoo
25-05-2025
- Business
- Yahoo
A Redditor Is Concerned About Their Brother Financing An RV Because Rent Is Too High: 'My Gut Tells Me This Is A Poverty Trap'
Sometimes, you have to downsize to cut costs. It's pretty common for retirees to reduce their costs to give their nest eggs more mileage. However, cutting costs can also make people comfortable with staying low instead of pushing toward challenges. That's why a Redditor is concerned that her brother wants to finance an RV because rent is too high. The brother is married with kids, and this decision can reduce costs while giving him ownership of an asset. However, the Redditor isn't sure if it's a good idea. "My gut tells me this is a poverty trap," the Redditor explained. Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – Other Redditors jumped into the comments to share their thoughts about financing an RV. RV living has been growing since the pandemic due to its affordability and flexibility. The Personal Finance Reddit community suggested getting an RV that's a few years old to save on costs. New RVs are more expensive, and they have higher insurance and maintenance costs as well. However, the brother will have to buy an RV that is less than 10 years old. Most long-term RV parks will not let you park your RV there if it is more than 10 years old. Trending: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Living in an RV may be a poverty trap if the brother doesn't have the goal of owning a house in the future. Having a bigger goal can inspire you to work harder and put yourself in a better community. While each RV community is different, he may get comfortable with owning an RV and scrape by with that setup. We don't know about the brother's level of ambition or the people he surrounds himself with. However, if he isn't surrounded by ambitious people, he is unlikely to become more ambitious than he currently is. This mentality can also help the brother when the RV inevitably needs repairs or breaks down. RVs don't last forever, and RV parks can boost their rents at any time. Most RVs can last for 100,000 to 300,000 miles, with a range of 10 to 30 RV living has risks, it can be a great idea if you approach it with the right mentality. One Redditor explained in the comments that they know doctors and nurses who have lived in RVs for two to five years to save money. Then, they were able to become debt-free and buy their dream home. The doctors and nurses in this example could have bought a smaller home instead of living in an RV. However, they now have much larger homes in more desirable locations. Doctors and nurses aren't the only ones to capitalize on the RV living costs. The original poster mentioned that the brother has that type of plan. RV living as a short-term solution can bolster your finances and set you up for a better lifestyle in the future. Read Next: Maximize saving for your retirement and cut down on taxes: . 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article A Redditor Is Concerned About Their Brother Financing An RV Because Rent Is Too High: 'My Gut Tells Me This Is A Poverty Trap' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
24-05-2025
- Business
- Yahoo
A 36-Year-Old Guy Wonders If He Should Take A Pay Cut To Move Back Home: 'I'm A Single Dude, No Debt, No Kids'
It's not a bad thing to live with your parents. Multi-generational households have become more common as young professionals and their parents seek to save money and fortify their finances. Caregiving has also fueled this trend. However, one 36-year-old is conflicted. He makes $100,000 at his current job but will only earn $75,000 if he moves back with his parents. On one hand, he's making less money. However, he will also save money since he no longer has to pay rent. Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – "I'm a single dude, no debt, no kids," the 36-year-old shared with the Personal Finance Reddit community when sharing his thoughts. Here's how the Reddit community responded. The Redditor hinted that moving with his parents would boost his mental health. That was all some people in the comments needed to hear. "Don't worry about the money. Do what's gonna get you feeling well," one commenter stated. While it's nice to have a good salary, health comes first. Furthermore, this isn't a sharp cut, since the Redditor is only going down from $100,000 to $75,000. The 36-year-old could pick up a side hustle and learn new skills if he wants to close the gap. Trending: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — The 36-year-old also has a tremendous opportunity to save money while living with their parents. We don't get a breakdown of the Redditor's expenses, but taking away rent can lead to significant savings. There's more to this decision than money, but if finances were the sole factor, the Redditor should see how their expenses will change if they move back with their parents. Rent is the most obvious cost, but will the Redditor save $25,000 per year by moving back home? If the 36-year-old rents in an expensive city, it's very likely that he will save money, even with the reduced salary. However, there are other variables to consider. Food and other essentials may be more expensive where the Redditor currently rents. The 36-year-old may also adjust their spending habits upon moving home, which can also boost his net unclear if the 36-year-old wants to start a family. Even if he doesn't want to raise a family, it's good to be in the mindset of wanting to pursue that route in the future. That way, the Redditor will be more prudent with his finances, knowing that he might have to support children. Living with your parents can help you save up for a down payment, especially if you stay with them for years. Housing is the biggest expense for most people, so making a big down payment can make your future years much easier. The 36-year-old is lucky to be in a position where his family will welcome him home with open arms. Not everyone has that setup, but the people who have this opportunity should capitalize on it for as long as possible. Read Next: Maximize saving for your retirement and cut down on taxes: . 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article A 36-Year-Old Guy Wonders If He Should Take A Pay Cut To Move Back Home: 'I'm A Single Dude, No Debt, No Kids' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
24-05-2025
- Business
- Yahoo
A 36-Year-Old Guy Wonders If He Should Take A Pay Cut To Move Back Home: 'I'm A Single Dude, No Debt, No Kids'
It's not a bad thing to live with your parents. Multi-generational households have become more common as young professionals and their parents seek to save money and fortify their finances. Caregiving has also fueled this trend. However, one 36-year-old is conflicted. He makes $100,000 at his current job but will only earn $75,000 if he moves back with his parents. On one hand, he's making less money. However, he will also save money since he no longer has to pay rent. Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – "I'm a single dude, no debt, no kids," the 36-year-old shared with the Personal Finance Reddit community when sharing his thoughts. Here's how the Reddit community responded. The Redditor hinted that moving with his parents would boost his mental health. That was all some people in the comments needed to hear. "Don't worry about the money. Do what's gonna get you feeling well," one commenter stated. While it's nice to have a good salary, health comes first. Furthermore, this isn't a sharp cut, since the Redditor is only going down from $100,000 to $75,000. The 36-year-old could pick up a side hustle and learn new skills if he wants to close the gap. Trending: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — The 36-year-old also has a tremendous opportunity to save money while living with their parents. We don't get a breakdown of the Redditor's expenses, but taking away rent can lead to significant savings. There's more to this decision than money, but if finances were the sole factor, the Redditor should see how their expenses will change if they move back with their parents. Rent is the most obvious cost, but will the Redditor save $25,000 per year by moving back home? If the 36-year-old rents in an expensive city, it's very likely that he will save money, even with the reduced salary. However, there are other variables to consider. Food and other essentials may be more expensive where the Redditor currently rents. The 36-year-old may also adjust their spending habits upon moving home, which can also boost his net unclear if the 36-year-old wants to start a family. Even if he doesn't want to raise a family, it's good to be in the mindset of wanting to pursue that route in the future. That way, the Redditor will be more prudent with his finances, knowing that he might have to support children. Living with your parents can help you save up for a down payment, especially if you stay with them for years. Housing is the biggest expense for most people, so making a big down payment can make your future years much easier. The 36-year-old is lucky to be in a position where his family will welcome him home with open arms. Not everyone has that setup, but the people who have this opportunity should capitalize on it for as long as possible. Read Next: Maximize saving for your retirement and cut down on taxes: . 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article A 36-Year-Old Guy Wonders If He Should Take A Pay Cut To Move Back Home: 'I'm A Single Dude, No Debt, No Kids' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
