P.O.W
Protection of Wealth
This aspect of your financial planning is about your family’s financial security. Anything you can do to make sure that no matter what happens, your as well as your family’s lives will continue in the same manner you are accustomed to.
Please note that this is not about improving your standard of living, but purely to protect it as it is. Most people look at P.O.W. and think it’s all about life cover, medical aid, and short-term insurance, but it incorporates a lot more than just that.
Let’s look at the different areas that you need to consider when building a solid foundation for your financial plan.
01
Life Cover
This is the cornerstone of your foundation
If you have anyone that are dependent on you for their standard of living (including parents or other family members) you must make sure you have adequate life cover to replace the monthly income that will be lost because of your passing.
It is also very important to make provision for enough capital to be paid into your estate to settle all debts and pay for any costs needed for the winding up of your estate.
02
Disability Cover
This will cover you if you lose your ability to earn an income because of an accident or illness. We usually divide this into two main sections of cover.
- Capital disability cover, which is a lump sum payout used to settle all debt and make provision for any changes you need to make to your lifestyle because of your disability.
- Income replacement, this is cover that gives you a monthly income to replace any income you have lost because of your disability
03
Severe Illness
Severe illness is cover for extra medical expenses you might incur if you are diagnosed with one of the severe illnesses covered by the company you are insured with.
Many people believe that this duplicates the benefits you have under disability and your medical aid, but it fills the gap where these benefits don’t quite reach.
Severe illness also pays on diagnosis where disability will pay for the loss of income earning potential, should the effects of the severe illness have a permanent effect on your ability to earn an income.
04
Medical Aid
It is of critical importance to make sure you are adequately covered for any medical expenses your family might have.
The problem most people face though is that medical aids have become so complicated and intricate that most people don’t understand exactly what they are covered for and how all the benefits combine to make sure that you and your family get the needed care when necessary.
05
Gap Cover
This is an insurance product added to your medical aid. All schemes have their standard rates that they are willing to pay to service providers for their services. Unfortunately, some service providers could charge up to 500% of the rate the medical aid is willing to pay.
This leaves clients with very large medical bills that they are liable for if their family needs specialised medical care. Gap cover will indemnify you for the difference between what the medical scheme is willing to pay and the actual cost, up to certain limits of course.
06
Short-Term Insurance
Short-term insurance is a very broad area of insurance that covers anything to do with your stuff. All the above benefits focus on you and your family, this focuses on the things you own. Your house, your furniture, your car etc.
There are so many technicalities to keep in mind with short-term insurance that it is of utmost importance to have an adviser that can guide you to make sure you are correctly insured for what you need. You do not want any nasty surprises if something does go wrong.
07
Will and Estate planning
Over 50% of the adult population in South Africa has no valid will in place, the difficulty and hardship that creates for your loved ones staying behind is not worth saving a few minutes by not drafting your will properly.
The extra cost people incur to wind up estates without a will is astronomical.
It is so important to make sure your will is drafted correctly, in detail, and legally, to make sure that all you worked for your whole life, ends up where it belongs.
It is also crucial to make sure you have added liquidity in your estate to make provision for any liabilities as well estate costs.
08
Business Assurance
8.1. Buy and sell agreements
This is an agreement setup between partners in a business to secure business continuity should one of the partners pass away or become disabled. Any of these events could have a devastating effect on the business as the business might end up with shareholders in the business that are either not interested in the business or ill equipped to function and add value to the business.
A well drafted buy and sell agreement mitigates this risk, making sure that partner’s dependents receive value for the asset build over time as well as ensuring no unwanted shareholders in a business.
8.2. Keyperson insurance
Most businesses have people (either shareholders or employees) that are crucial for the successful operation of the business. In the event that such person passes away or becomes disabled the business is placed in unnecessary risk as a result of the loss of those skills.
Keyperson insurance is taken out on the life of such keyperson to financially secure the business’s recovery from any such event.
8.3. Contingent liability
Often directors or shareholders of company’s sign surety on behalf of debt acquired by the company. All sureties can be held jointly and severally liable for such debt.
Taking out contingent liability insurance ensures that the company has the necessary funds available to cover all debts should one of the sureties pass away or become disabled.
09
Group Benefits
As an employer you also share some responsibility for your staff’s financial well being as a person who feel financially secure and looked after is usually more positive and productive.
We can help you structure a new group benefit scheme for your employees that will not break the bank. We can also help you restructure your existing fund to be more cost effective, beneficial and simpler to administer.
As you can see building a solid foundation takes much more than just getting some life cover, having a medical aid and insuring your car.
If you do not plan for all these areas holistically, and accurately, it very quickly becomes completely unaffordable, which means you end up with areas that are not covered and therefore your family’s financial future will be at risk.
The specialist advisers at RRH will help you do a comprehensive risk assessment, focusing on what you need first, and not just trying to beat what you’ve got.
They will help you be certain that your primary risk areas are covered first, before spending money on secondary risk areas.
Remember, the focus of risk planning should always be to get you the right cover for your needs, for the lowest possible expense, as everything you spend on risk cover is what we call “What if? Money”
It’s money you pay a third party for if something happens. It never builds up a cash value or gets paid back to you, unless one of the insured events happen. It doesn’t matter what the marketing guys at some of the insurance companies try to convince you of.
The less you need to spend on risk cover, the more money you will have available to spend towards your C.O.W.
C.O.W
Creation of Wealth
Creation of wealth is everything you can do to improve your standard of living by building assets over time.
RRH can help you build a personalised investment plan to optimise the growth of your investments.
Our specialist advisers can help you with the following investment strategies:
01
Saving Before Retirement
It doesn’t matter if you want to save money so you can receive tax benefits or you are looking for something more flexible that will give you a tax-free lump sum payout, our advisers will create the ideal savings and investment plan that suits your needs.
They will complete a comprehensive investment analysis with you, determining exactly how much you will need to retire comfortably and then create a plan within your budget to move you towards that goal.
After your analysis you will have a much clearer picture of what your current retirement planning will accomplish, and with that awareness, you can create a realistic roadmap for your retirement.
02
Investing After Retirement
Once you are ready to retire there are some very important decisions to be made regarding where you will be investing your life savings.
These are the most important investment decisions you will ever have to make, as one bad decision can ruin your financial security during retirement.
You need the help and advice of someone you can trust, to guide you through the myriad of choices when it comes to income generating investments.
Your adviser will work with you to create a personalised, sustainable, investment plan, taking into consideration all your investments.
They will give you realistic advice on what you can achieve with the capital at your disposal, so that you are always aware of the limitations, if any, of your investments.
03
Saving For Specific Needs
There are numerous other reasons you might want to put money aside for future goals.
You might want to plan for your children’s education, a future holiday or to buy your dream home.
Our advisers will help you calculate exactly what you would need to save monthly to achieve your goal as well as guide you to choose the right investment vehicle to help you attain it.
04
Retirement Risk Provider
Most of us started planning for our retirement from a zero base.
Just imagine how much easier it would have been to achieve your retirement goal if your parents gave you an asset of R5 000 000 you could use for your retirement!
Well at RRH we created a unique strategy that allows you to give your children that advantage in life.
You can guarantee them a capital amount for their retirement by using this strategy.
Our advisers will explain exactly how much capital you could guarantee for your children’s retirement.
Set up a meeting with an investment specialist today to show you how it’s possible.
05
Financial Coaching
Unfortunately, even when saving as much as you can for your retirement, there are still limitations to what you can expect to achieve.
The statistics show that 96% of people who retire cannot maintain their standard of living within 5 years after retiring.
To address this issue our sister company iRetire Enterprises created a 5-step program you can follow to reach financial retirement in 10 years.
You can also get a personal wealth strategist to coach you on how to implement the 5 steps, guiding you, giving you advice and holding you accountable to achieving your goals.
For more info on how this coaching program can benefit you click the button below: