How to use gap insurance
The Citizen|August 26, 2024
MEDICAL COVER: SAVING MONEY AND PROTECTING YOUR INCOME WHEN UNEXPECTED HAPPENS
How to use gap insurance

» Health costs often exceed benefits, with balance falling to the member to pay.

You have to plan to protect your savings and the way to do this is to use gap cover. If there is one thing that Covid lockdowns taught us, it is the need for financial resilience. As many of us found, the unexpected can occur and having a cushion of savings to fall back on is critical.

"South Africans just do not save enough, and it is therefore doubly important that your savings are not depleted unnecessarily by entirely predictable 'extra' costs, such as medical costs not covered by medical aid," says Michael Emery, marketing executive at Ambledown Financial Services.

He says South Africa's savings rate is 0.5%. Compare that to our peers, such as Brazil (16.9%), South Korea (13.7%) and India (10.8%).

You can use a common budgeting strategy made popular by Elizabeth Warren in the book All your worth: The ultimate lifetime money plan where you use the 50/30/20 rule and use 50% of your income to pay the bills, 30% on discretionary expenditure and 20% on savings.

"I doubt most South Africans come even close," says Rob Immelman, CEO at MEMP Group.

While pandemic lockdowns may be considered true blackswan events, Immelman says that unexpected medical expenses are one of the more common reasons people find themselves needing cash fast and yet few people have sufficient savings for these. "You need a plan," he emphasises.

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Diese Geschichte stammt aus der August 26, 2024-Ausgabe von The Citizen.

Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.

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