Deciding what kind of life insurance is best for you can be a headache, especially since the people who sell it to you earn their living from it and don’t always sell you the product that is best suited to your financial needs. Learning about the different types of insurance that are available will at least give you a head start when the time comes to make your decision.
Life insurance aims to pay out a sum of cash to your dependants should you die while they are still reliant upon your income. Life insurance can help your spouse pay off a mortgage and put your children through tertiary education. Therefore, you are most likely to need it if you have dependants. If you are single, your money is far better spent on disability insurance, as that stands to really benefit you in case of an accident or serious illness. Broadly, there are two types of life insurance: term insurance and whole insurance.
We all dream of owning a home, but at the same time, buying a house has never been scarier. The financial crisis, which still has a firm hold on the global economy, has shown us what irresponsible financial activity can do on a worldwide scale. The process involved in buying a home can seem confusing and downright laborious if it is something you haven’t ever done before. The risk is considered worth it, however. So, if you are planning on taking the leap, here are some points by top financial advisors to consider.
Buying a home
There’s no such thing as good debt. That’s what some people will tell you. In a sense, they are right. Owing money puts you at a disadvantage; no matter you look at it. However, credit is vital if you want to get by financially in this day and age. We’re not talking about bridging the gap between your salary and month-end; we’re talking about being eligible for a loan when you eventually need one.
The problem is …
You need a credit history to get credit.
It’s similar to the problem that students fresh out school have when they want to enter the job market. Employers want experience but students can’t get experience until someone takes a chance.
Debt is ubiquitous, is it not? In these uncertain economic times, few countries can claim to be unaffected by debt. As there doesn’t appear to be any end in sight to the financial woes globally, debt levels continue to rise. Or do they?
Recent figures indicate that some countries are making inroads in the battle against national debt levels.
For example, Heather Struck (Reuters.com) reported that Americans, especially young Americans, have learnt some valuable financial management lessons and are taking pains to avoid taking on unnecessary debt. The measures are common sense, which will please all the people who have spent the past five years touting them as simple solutions.
- Restricting credit card use.
- Not rushing into the property market.
One of humanity’s greatest flaws is not cruelty, nor is it apathy or greed; it’s a complete and utter failure to read the fine print.
We know we should, we tell ourselves that we’re going to, we take contracts home to have our lawyer friends look over them and what do we do? Nothing. We glance over the jargon and pretend to understand it and we nod sagely while the finer details are being are being ‘explained’.
If we take it home we leave it on the dining table until the broker reminds us that it needs to be signed pronto and then we shove it in the fax machine and hope for the best. If we do get round to inviting our lawyer friend over, we usually spend the evening drinking beer and shooting the breeze, the contract forgotten on that black hole of a dining room table.
Buying a house should be an exciting time, but with our current economic environment the most adventurous part is often the wait to hear if you qualify for a personal loan or not.
That aside, once you have got your financial affairs in order, it can still be an exciting time for a first-time home buyer. A place to call your own. A dwelling with which you can do what you like. Perhaps even feelings of freedom and independence if it is the first time you are living on your own.
If you have come from renting a place, the sense of ownership may be a huge relief. Often rented properties come with a lot of rules and restrictions about what you can and cannot do to the property.
What is the state of South Africa’s property market? Well, it depends on who does the research. There are those who say that the market is looking up with an increase in mortgage approvals, while others say that there is more doom and gloom on the horizon as the knock-on effects of the Euro crisis take hold. Various South African banks have come down on the optimistic side, with reports that the economy and the property market are improving.
According to First National Bank (FNB), the property market is the best it’s been since June 2010, although, it is admitted that there is plenty of contradictory information on residential property which is clouding the matter, especially with regard to future prospects. FNB’s House Price Index showed in increase in price growth between April and May and the bank’s property strategist says that the bank recorded the highest year-on-year growth in May since June 2010.
Do you even have a nest egg; something put aside for a rainy day? South Africa is notorious for its low level of savings, but, then again, it’s also notorious for its high levels of unemployment and poverty. There is, however, a massive savings gap in low to middle income earners who find that they have to stretch their entire salaries just to survive from month-to-month. Nevertheless, there are savings options for anyone, no matter what their income.
Recent research has shown that the traditionally accepted standard of calculating funds needed for retirement – 75% of current earnings – is woefully inadequate. This is scary news for the people who are doing their best to do the right thing and save for their old age, but it’s even more alarming for people who aren’t because it says horrific things about the future cost of living. It once again replays that tired, stuck record about the importance of savings.
Do you sometimes feel that you have to take out a loan just to be able to pay your monthly car insurance premiums? Many people feel that their insurance companies are out to fleece them of every available penny while making them jump through rings of fire to get their rightful compensation. Many people feel that their insurance premiums are unjustifiably based on arbitrary generalisations. To try and give these people a voice, MUA Insurance Acceptances conducted an online survey to get an idea of what the public thinks should influence insurance premiums.
If you can afford it, now is the time to buy residential property in South Africa. According to a recent announcement by Erwin Rode, a property economist, the first half of 2012 saw the biggest drop in property prices in 30 years. And, the Reserve Bank has just announced that it will cut the interest rate by 50 basis points.
Or, you could wait a bit, because according to Rode, houses in South Africa are still overvalued (property owners will be unhappy to hear that) and that prices are likely to fall even further in the future. This is not only based on the overvalued prices (overvalued by 25%) but is also based on the continuing global economic turmoil.