How do those in retirement cope in challenging times? How do you efficiently plan how much to spend on necessary insurance products? Let’s take a look…
Managing the costs that come with everyday life is no easy feat for the majority of retirees in South Africa. Rising inflation means that many are left with the tough decision of cutting back on anything that is not essential – and that sometimes means insurance for those in retirement.
The economy continues to get tougher, too. With the recent drastic increases in fuel prices, consumers have been hit hard. According to Stats SA, consumer inflation went up from 4% in January 2019 to 4,1% in February 2019. It was noted that the rise was mainly due to medical insurance and transport costs. Medical costs climbed by 4,3% year-on-year in February. Medical service providers increased fees by 5,7%. Fees for doctors increased by 5,8%, fees for dentists by 5,5%, and hospitals, 4,5%.
These challenging times leave retirees facing many obstacles when it comes to insurance. According to Vera Nagtegaal, the executive head for Hippo.co.za, retirees will have to take a number of considerations into account, in order to efficiently plan exactly how much they will spend on required insurance products and what this security will do for their savings over time.
In the latest 10X Retirement Reality Report, it showed that 53% of people don’t know what their pension is worth – with most underestimating the effects of inflation, the realities of living on a pension, and having to spend less. 62% of people have no retirement plan or little understanding of their existing policy. The result is such that there are many unprepared retirees who cannot afford essential insurance products.
“To ensure a worry-free retirement, funeral cover, medical aid, and car insurance should be on the priority list,” says Nagtegaal.
Possible challenges in obtaining insurance
for those in retirement
Statistics show that the amount of people who can keep up with medical aid memberships after retirement is under 10% and, because of this, medical aid memberships are often one of the first things to go.
Nagtegaal says that while it is not a requirement in South Africa to have medical insurance in place, it is certainly recommended.
“Although State hospitals have the expertise to professionally assist in an emergency situation, the real concern is whether or not you will be accommodated at the hospital. These facilities are often over utilised and there are long waiting times that could leave you without assistance – even in an emergency situation. Therefore, the need for medical aid, or even just a hospital plan, is very high.”
She explains that pensioners always have tight budgets and often have lots of medical bills due to ailments that come with ageing.
“Having a medical aid plan should be a non-negotiable – even when budgets are limited. There are always options available to suit every budget and medical need, such as entry-level plans to cover day-to-day medical expenses. Pensioners could benefit from taking out medical aid plans with comprehensive in-hospital cover for medical emergencies and lower cost day-to-day cover for GP visits and medication.”
Pensioners who have never been on medical aid before, in most instances, have to pay a late joiner penalty, while there is also usually a waiting period that will apply.
Pensioners may find some difficulty in obtaining funeral cover because there is a greater risk of death occurring sooner than a younger person. There are, however, some options available.
“Without sufficient cover, family members would have to cover the cost of your funeral, which could get them into debt,” Nagtegaal says. “There’s no better time than the present, to ensure that your funeral arrangements are fully taken care of. Do some research and compare Funeral Cover quotes online, to find what’s most suitable for you – especially if you are over 80 and need a policy that fits your budget.”
Car insurance regulations for people over 65
“It is important for people to check the terms and conditions on their car insurance policy,” she says. “There have been instances where drivers over a certain age have had to provide proof that they are fit to drive.”
Travel insurance for people over 65
Travel insurance provides security against possible medical expenses, missed flights, and those annoying cases where luggage is lost or hasn’t arrived at the destination yet. As with everything else, there are also terms and conditions that come with this.
Nagtegaal explains that it is important to note that the majority of insurance companies do not cover pre-existing medical conditions. “Make sure that if you are looking to take out this type of travel Insurance that you check and review the details of the policy with your insurer. Some insurers may require a doctor’s certificate before commencing with the policy.”