Our agenda this month will touch on entry-level and affordable products that will assist you in this space until you have turned the financial leaf to upgrade to more substantial offerings. Here is how you can kick off your financial journey:
- Last Will and Estate planning
- Medical Aid and Health Insurance
- Investing – Our new R100 option
- Funeral Cover
- BSQD Strategic Partnerships that save you money
Last Will and Estate Planning
Having a Will is one of the most important decisions you will make in life. It ensures that all your assets and funds accumulated through hard work are dealt with according to your wishes. Not having a will or an old and outdated will opens the door for leaving the decisions to others. Our practice has come across deceased persons who did not have a will where there were minor children that needed care who, unfortunately, never got any funds. All this because no specific executor was appointed to look after the interests of the minor children.
Having an old or outdated will can create chaos, especially when you divorce or inherit a substantial amount of assets. You need to ensure that your assets are protected. If one of your appointed heirs (someone that inherits from your estate) passes on before you, they can no longer inherit from your estate, and you need to ensure that your will is up to date.
Recommendation:
A will must be reviewed at least every two years to ensure that it is current and up to date should you pass away.Our practice renders this free service to the community to ensure that your hard-earned assets and funds do not get into the wrong hands and are merely wasted away. Further, we render this free service to ensure that the interests of the minor children are protected. Great news: We have partnered with Capital Legacy. If you have a policy with Capital legacy and have not updated it in the last 12 months, please contact us!
That got me thinking: How many of us had our carpets pulled from under us? How many of us didn’t make the skateboard jump? How many of us had the major slip when carrying a full tray of milkshakes? And how many of those milkshakes, because of Covid, landed on your clients? How many clients and suppliers alike landed on their backs on the pavement and endured a daily ice bucket challenge?
In all honesty, I don’t think a single business can say they were not impacted and that the pandemic did not taint their dreams and ambitions. But it is never too late to rebuild and get back on the path to success.
Let’s look at some positives:
Most people have been working from home in a more relaxed environment. Although some are returning to the workplace, some companies have opted to continue working remotely.
It got so much easier to meet through Teams and zoom where one can record the meeting. It has worked exceptionally well for us as a business, and we will continue with this practice. Not only does it save travelling time and cost, but you also have a recording and a to-do list at the click of a button. Gone is the he-said-she-said.
Traffic, to me, is the ultimate winner! Fewer cars on the road mean a lot less stress and anger management!
The first question a client asked me was where to start the rebuilding process. The quick and easy answer is GOALS. Yes, we must set short-, mediumand long-term goals. The goals should extend into our financial affairs, as most of the goals are financially orientated. An excellent short-term goal is to pay off smaller debt. The medium is to re-start the study activities or start planning for the matric farewell dress for your daughter in 5 years. The long term is that 25th wedding anniversary getaway to Monaco or a Caribbean Island. The most important thing is setting the goal, formulating the plan, and then managing the plan. So, although the pandemic has thrown you slightly off-course, a few tweaks could get you back on track.
As a company that supplies Financial Services to clients, we had to do the same – we had to change the way we worked in the last few years, but most importantly, we had to adapt to assist you in achieving your goals. I am pleased that we could easily adjust and not drop the ball. As advisors, we must have a formal qualification, and through continued professional development, complete an accreditation test yearly to give you sound advice on products.
In the Financial world, the same happens – money comes and goes. When the money wave hits us, everything is well, but just like sitting on the beach smiling at the blue yonder, and then suddenly dark clouds gather, waves get bigger, and we must rush to get out of harm’s way – you need an umbrella to protect you from the elements. That’s what inspired this newsletter today – insurance is like an umbrella for the good and the bad days. You get various types of umbrellas, but for now, I will give you an overview of some of the products you need at the beach where you are currently sitting and riding the waves of life.
Last Will and Testament
Did you know that everyone over the age of 18 should have a Last Will and Testament? This means, in theory, that everyone over the age of 18 will have an estate and that there will be certain estate fees when we pass away. Therefore, it is essential that you and your beloved friends and family make sure that you have a Will in place and enough money in the estate to pay for the estate fees. We can assist you with a free Will through one of our partners, Annie Van Der Merwe, a family law attorney specialising in this regard.
Life cover and Funeral cover
Funeral cover is the first type of insurance anyone over the age of 18 should consider. The cost for a standard funeral or cremation ranges between R15 000 and R30 000; thus, having the necessary cover in place is crucial. We have various options available that could cater for your need. A very popular option is the Member + 9 dependants. This means that the member can insure him/herself and nine other family members on the same policy. It is ideal for families with older relatives that need cover.
Medical Aid and Gap cover
Most medical aid schemes will launch next year’s rates and benefits in September 2021. You will then have the option to change your current plan to something else, effective January 2022. Please look out for correspondence from us regarding the changes and new rates – you can follow our Facebook page for live updates. It is expected that schemes can increase their prices by as much as 6%. Don’t fall into the trap of not knowing what the best budget options entail. We can supply you with a free quote and comparison.
Investments
The wind of change continues to blow, and as such, our investments change as we evolve in the markets. Sygnia, an investment house, has recently launched a new fund for individuals – the Sygnia Solactive Healthcare 150 ETF Fund. It’s a platform that allows you to invest in the top 150 Healthcare companies globally. It includes companies like Johnson and Johnson, Pfizer, GSK Pharmaceuticals and many more. This is a market that is bound for growth because of the need for vaccines and treatment for Covid.
Sygnia also offers access to the 4th Industrial Revolution Fund, a tech-savvy fund where you invest in companies that do 3D printing, Robotics, and Artificial Intelligence. Over the last 3 years, this aggressive fund yielded in excess of 50% growth per annum. Both these funds are passively managed and with a meagre administration fee that could yield some good growth in desperate times.
In closing, let’s get back in the water, ride the waves, and stay on top of our financial affairs
When we listen to our clients talking about the pandemic and how quickly we as a nation adapted to the business versus home environment, it amazes me how adaptable we really are to change. Although we initially resisted the change, I am pretty convinced that most of us by now have had a Zoom or Teams meeting and know how to switch the camera and microphone on and how to unmute ourselves. Precisely one year ago, only the absolute minimal persons used either of the platforms daily. This technology has allowed many people to work from home effectively, consult with possible clients and, of course, keep income flowing into their businesses.
In the Financial Planning space, we have seen similar trends. Clients have had time to look at their portfolios and products, changed paying patterns, changed premiums, and amended their policies to a cheaper alternative. The biggest winner was, in fact, the trend of activating new policies. Please always make sure that you consult with your adviser yearly for your product/s to stay relevant – it is in your best interest.
Your financial plan that made perfect sense a few years ago might need some adjusting.
In the Investment space, we have seen a huge take-up of small retirement annuities and tax-free investments. Although the minimum amount to invest is R500, this product can grow over a period of time with compound interest, and it can still give you some income at retirement. It is always good to start saving and investing at a young age. The best quote I have heard from a grandma to her grandson was, “I will rather pay R500 into an investment for you than give you the money to have a good time. You will thank me when you reach retirement.“
If you would like to revisit your Retirement Annuity and make sure that it is growing and not losing value, please get in touch with us.
One of the first products that got cancelled by our clients when the financial burden struck was Life Cover policies. Some companies offered to do a payment freeze, and others reduced benefit cover. Now is the absolute best time to revisit your Life Cover and consider either re-implementing what was taken off or expanding on where there are shortfalls. Please do not forget to re-activate your product – you never know what lies ahead. Reducing cover and restructuring is usually the more responsible way to keep your policy up to date.
Funeral cover is a hot topic at the moment
How much funeral cover is enough? How much funeral cover do you really have? Is it a cash amount, or does it offer a service? When consulting with clients, they usually say they have a funeral cover in place; however, the value is what matters the most. A standard funeral will cost in the region of R30 000, and it is just covering the basics. Why is this important? Because your funeral policy might only cover R5 000 or R10 000 as per the cover that was sufficient 10-15 years ago. As with any policy, it is very important to re-visit your funeral plan and confirm that the cover amount is in line with recent figures and costs. It will ensure that your family is adequately covered.
In the Medical Aid sector, we are heading into Tax season. Please remember that your tax certificate will be e-mailed to you from your medical aid scheme. If your e-mail address has changed because of an employment change, you will need to contact the scheme to update your details. Do this today to ensure that you receive the tax certificate as soon as it is released. An alternative is to download the scheme’s App on your mobile device or to login to the website where your certificates are available for download. You will also receive an SMS from the scheme once the documents are available.
If you or any of your family or friends, perhaps even colleagues, need any assistance with financial products, please get in touch with us. Google is not the best financial advisor to turn to! We are a reputable company that carries certification that permits us to give sound financial advice.
Until next time, please be safe and take care of your loved ones.
Although we are still fighting the pandemic today, we have seen a real revamp of business models and many companies adapting to the “new normal”.
Considering the above and the current financial climate, we’ll share some tips in this newsletter to guide you in the financial product decision-making process. We understand that various financial decisions need to be made, and we would like to offer our services to you. But before we get to this, let’s look at a few very interesting developments in the industry.
There is a distinct difference between Medical Aid and Health Insurance products. How would you know the difference? It’s simple, look at the price. Many individuals and companies have started to opt for the more affordable option, but the benefits are very different. Let us have a closer look!
Medical Aid Schemes are governed by the Medical Schemes Act – meaning the Council for Medical Schemes can amend the products to align and give clients more peace of mind. These are things like unlimited chronic and hospital cover for Prescribed Minimum Benefits (PMB). Thus, an open-ended cheque book for major events. Most schemes have removed overall annual limits but pay according to the scheme reimbursement protocol.
Health Insurance products fall within the Short-Term Insurance space. The schemes mostly offer rich day to day benefits with limited in-hospital cover. In recent events, these products have moved within the Council for Medical Schemes’ scope, and as it stands, they will have to conform to the rules set out in the Medical Schemes Act, or close. In short, these schemes will have to register as a medical aid scheme or cease to operate. An extension was granted for this to be finalised by March 2022.
A huge contributing factor that has an impact on a medical scheme’s cost is claims. The risk for Health Insurance Products was limited due to the overall limit for in-hospitalisation at R167 000 per annum. This amount is enough to cover smaller procedures, but not sufficient for more serious claims. Clients are vulnerable to events that are more serious and expensive. This leaves me with the question: will these schemes be financially stable to handle the impact of PMB claims once they comply? Keep in mind that Medical Aid gives unlimited cover. There is bound to be some increases along the way and could impact clients negatively as the costing model is very different from a medical aid scheme.
Your medical aid scheme offers various options. The only reason to move from a scheme is if none of the options suits your needs any longer. Your scheme will release their new rates and benefits for 2021 during September & October 2020. If you would like a free quote and comparison and would like to find out if there is a more affordable plan available, then please make contact with us.
Some handy tips when choosing an option:
Look at your current out of hospital claims for the last 24 months. The average cost should give you a good indication of how much cover you require yearly in your savings portion.
Plan ahead and include this figure in the above amount. If you know you need to get new spectacles and the quote is R5000 every two years, build an inflation rate for the frames and lenses into your Medical Aid day to day budget.
Look at options in the scheme that gives fewer benefits, as well as more benefits, and see if funding some claims from your pocket is not cheaper. A great example is needing an extra R2000 worth of savings, but the next higher plan on your scheme charges R3700 per month for the extra R2000.
Always try and let savings roll over into the new year. Saving for a future event is possible. For instance, dental implants – this is usually quite expensive. Savings rollovers could fund this in years to come, or at least soften the burden. These procedures can cost anything from R30 000.
If you have not signed up for Gap Cover, we would like to urge you to do so. With schemes only covering in-hospital costs at a 100% or 200% of the scheme rate, and your specialist possibly charging between 200% and 300%, and with there being co-payments on scopes and scans, it is highly advisable to consider these types of cover. It is a family type cover, thus covers all members on your plan.
Life and Investments
The last five months have brought real uncertainty, and some of us faced the reality of not receiving an income, or part of it, which had the effect of policy cancellation. Or as we say, stripping out non-necessity from our budgets. The first policies that got cancelled were Life Cover policies, and Retirement Annuities were placed on hold. We have recently noticed a positive shift with clients not only re-activating policies but also taking the time to meet with a Financial Planner. Not only to re-structure policies but for advice on possibly better products and rates that suit their current needs.
There was no real growth in the Investment space, and any expert would tell you that if you received 5% per annum growth on your investment, it was a lot. We have seen a real change in this, and there are some really good investment options available. Always make sure that your investment is growing and that the risk exposure is aligned with your current risk rating. We have seen that members who stayed invested through these tough times ultimately recovered better compared to clients that switched portfolios or withdrew the funds.
Please take note that we are available to consult with you. In order of safety, we can consult with you via Microsoft Teams and Zoom, and we can most certainly assist over the phone.
If need be, we can meet at a Mug & Bean or a coffee shop near you. Please get in touch should you require any assistance.
Kind Regards
With that said, the Financial Industry was ordered back in lockdown level 4 for essential services and will return in full swing in level 3. Various legislation with all its do’s and don’ts affect how we will be doing business, and as a result, we have amended our services offering slightly to get in line with the authorities. As of 1 June 2020, BSQD Financial Services will operate as a virtual business. We have asked all our agents to set up an office at home, and, with utilising the latest technology, we believe that you will enjoy our new virtual service that is of the same top quality.
Legislation determines that we are not allowed to visit a client’s place of residence during lockdown level 3. We are, however, allowed to visit the client’s place of work or use our own office as long as the necessary safety measures are taken and that both the client and the agent is protected and safe at all times. We believe that technology will ultimately be the way to go and would prefer, for the safety of all involved in these trying times, to meet via Zoom and Microsoft Teams, as well as Skype or Facetime on Whatsapp. We personally prefer Zoom and Microsoft Teams purely because meetings can be recorded. Recordings give you that peace of mind that you have a record of advice after each virtual meeting – much like minutes of a meeting. These meetings are still face-to-face but can be done from the comfort of your home, at a time of your preference – even after normal working hours. We have tested these platforms in the last few months and have found that they will add tremendous value in the advice and servicing models of the business. This is certainly one of the positive changes that have come from lockdown 2020.
Moving on to what is the most relevant topic in the industry now, let’s answer a question we keep hearing: “In your opinion, what insurance product is the most valuable in this coronavirus time?”
Surprisingly, Medical Aid is the only insurance product that will supply cover to its members. The Council for Medical Schemes has added the COVID-19 condition to the list of Prescribed Minimum Benefits (PMB) that must be covered by all medical aid plans and schemes. The Council will, in due course, publish the PMB Treatment Protocols for schemes that will show all the relevant treatments and how it will be funded. This gives all of us the peace of mind that we expect from our medical aid, won’t you agree?
Most members are looking at costs and tightening their belts. Another positive is that most schemes have introduced alternative payment methods so that you can remain on medical aid – and not cancel it – during these trying times. The options are dependent on your scheme, but includes payment from positive savings, payment holidays, downgrades, and options changes. Please get in touch with us should you need to talk about your scheme and hear what they offer now.
There you have it, some great positive changes in the medical aid space!
In our next edition, we will be looking at some legislative changes with regards to Health Insurance, how it compares to Medical Aid, and which one is ultimately the better solution. We will also be touching on Wills and Estate Preservation and why it is important to update your will. And lastly, we’ll remind you why it is important for you to have a credible financial advisor.
Stay Safe