In this uncertain work environment we are currently living in it is crucial to be prepared for the worst possibilities out there, such as retrenchment.
I have said it before in my previous articles, but it can not be stressed enough – be financially prepared!
According to statistics, people make at least 3 career changes in their lives. Only 9% of these people, preserve their invested capital towards their Retirement.
An Emergency Fund is always healthy to have built up to around 4 times your nett take home pay at any given moment of time in life. The most practical options to consider normally for this purpose is either your Access Bond (The extra equity/cash that could be accessed from within your homeloan account) or that of a Cash Money Market Fund account. They are both very liquid (accessible) and provide better interest than a cheque or savings account.
When retrenchment is imminent, speak to your creditors and ask for smaller payment options or in some cases you even get the holiday waver. Certain credit providers provide their clients with up to six months holiday payments, where they give you time to adjust to your new circumstances. However, this does’t mean you will never have to pay this waver, it will be adjusted in your repayment options.
Most importantly, do NOT stop making payments! Non-payments on your policies will be considered as a contract break and you will lose out on the past years of payments made and all their benefits.
Certain Product Providers within the Assurance Industry do offer Retrenchment Assurance. This basically pays you an income, but only for 6 months. You could add this to other benefits such as your life, disability or Severe Illness cover and more core risk benefits. We all know that when our safety is in jeopardy, emotions run high and we tend to make emotional instead of a well thought out decisions. The last thing you should do is to just cancel your policies. Rather arrange to meet up with your Financial Advisor to discuss the situation you are facing and have your budget re-drafted. Then review and discuss all your policy and investment’s penalties, losses, values, benefits as well as the purposes that they were intended for and how that could be negatively affected should it be cancelled, sold or stopped.
The more you can share with your Financial Advisor, the better the advice.