People often think financial wellness starts and ends with budgeting and saving, when in fact it encompasses building, protecting and transferring financial security.
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True financial responsibility is not simply about how much you save, but how well you protect what you are building. This is where savings and life insurance become part of the bigger financial wellness discussion.
Savings help individuals create a financial buffer and work towards their goals, while life insurance provides protection against the financial consequences of an unexpected loss of income. Together, they form complementary parts of a responsible long-term financial plan.
Dr Jessica Hamuy Blanco, Product and Clinical Risk Executive at Dis-Chem, says while savings and life insurance are separate components of financial responsibility, they are closely interlinked.
“Saving is about building your financial future; life insurance is about protecting it. Financial responsibility means not only putting money aside for the things you want and the goals you hope to achieve but also making provision for people who depend on you. Life insurance can provide a financial safety net that helps protect your family, income and long-term plans if you can no longer provide for them.
“South Africans are increasingly encouraged to save, budget and plan for their financial futures, but financial resilience is about more than accumulating money. It is also about protecting the income, assets and people that make those plans possible. Life insurance should be viewed not as a grudge purchase or a product bought out of fear, but as a key component of responsible financial planning.”
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She says there are five key points to consider:
- Financial responsibility means planning beyond today
Financial planning should account for immediate needs as well as longer-term commitments: from supporting a family and paying off debt to buying a home and preparing for retirement. - Savings build the foundation of financial resilience
Regular saving creates a financial cushion for emergencies and future goals, but meaningful savings take time to accumulate and can be vulnerable to an unexpected loss of income. - Life insurance protects the financial plan when life doesn’t go according to plan
The purpose of life cover is fundamentally different from saving. Savings help you accumulate financial resources; life insurance can provide a lump sum or other benefit to help dependants cope financially following the disability or death of the insured person. - Financial protection should evolve with life
Financial protection is not static. As responsibilities and life stages change, through marriage, children, home ownership, caring for parents or building a business, financial plans and levels of protection should be reviewed and adjusted. Inflation can also affect the value of existing cover over time, making regular reviews important to ensure protection continues to meet changing needs. - The goal is financial resilience, not simply accumulation
The question should not only be “How much am I saving?” but also “How protected is my financial future?” True financial resilience combines building a reasonable savings base with protecting the people and commitments that depend on it.
“Savings and financial responsibility are about preparing for the future, while life insurance protects that preparation if something unexpected happens. Savings can take years to build, but an unexpected death or disability can immediately wipe out an income and create significant financial pressure.
“Insurance and savings therefore serve different but complementary purposes – savings accumulate wealth; life insurance provides financial protection against a potentially devastating loss.”
“Taking out life cover is a proactive way of ensuring that the financial responsibilities a person has worked to meet can continue to be met by their family. It’s about conscious long-term responsibility: taking out life cover is a proactive way of ensuring that the financial responsibilities a person has worked to meet can continue to be met by their family,” name concludes.
Featured image: iStock/Jacob Wackerhausen
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