By: Henno Senekal
Last week the spotlight turned to the importance of preparation and adaptability in overcoming unexpected environmental or societal disruptions on World Resilience Day (December 10). Financial resilience—the ability to recover from financial setbacks and emerge stronger—is equally critical for South African families looking to thrive in 2025.
Risk involves the small probability of something happening but with potentially massive consequences for your family. What people often don’t realise is that their ability to earn an income is the foundation of their family’s financial resilience. Your income sustains your family’s lifestyle and builds their future to achieve financial wellness. Protecting your ability to keep earning—whether against accidents, illness, or disability—should be the first step in ensuring your family’s stability and resilience.
According to the Old Mutual Protection Wheel calculator, a 30-year-old earning R40,000 per month is projected to earn approximately R58 million by retirement. This highlights the value of earning potential and the need to protect it to ensure your family’s financial stability and long-term goals remain secure, even in the face of unexpected events.
Central to protecting your future income and achieving financial resilience is called the “claims progression curve,” a practical framework that outlines key financial risks individuals could face throughout their lives and the risk cover solutions needed to mitigate them.
This progression curve ensures that every stage of financial risk—immediate, medium, and long-term—is addressed, offering a comprehensive approach to safeguarding your family’s financial stability.
Each stage in the claim’s progression curve targets a specific risk, and true resilience comes from being prepared for a wide range of possibilities. By diversifying your cover, you minimise the risk of being left exposed in any area, which could otherwise undermine your entire financial plan.
Rather have a little bit of everything than focus solely on one type of insurance. It’s about covering your bases so that no matter where the impact comes from, you have some level of protection.
Here are the levels in the Claims Progression Curve:
Immediate protection: medical aid and gap cover
The progression curve begins with addressing immediate needs, such as medical aid and gap cover. These essential tools protect families against unexpected healthcare costs, ensuring that they do not have to dip into their savings or take on debt to cover hospital stays or specialist fees. By having these protections in place, families can face medical emergencies with greater confidence and without the added financial strain.
Short-term income stability: temporary income protection
Temporary income protection is the next step in the progression curve, providing relief during short-term work disruptions. This cover bridges financial gaps when sick leave runs out or during recovery periods from illnesses or injuries. By ensuring that essential expenses are met, temporary income protection allows families to maintain their standard of living even when a temporary loss of income occurs.
Financial support for serious health challenges: severe illness cover
Severe illness cover comes into play when individuals face life-altering medical conditions such as cancer or heart attacks. This cover provides a financial cushion that can be used for treatments, recovery, and any necessary lifestyle adjustments. The financial impact of severe illnesses can be overwhelming, and this type of cover ensures that families are not left struggling to manage both health and financial crises simultaneously.
Safeguarding long-term income: permanent disability cover
Permanent disability cover addresses the long-term financial impact when the primary breadwinner is unable to work due to a permanent disability. This cover helps families maintain their standard of living by replacing the lost income, ensuring stability in the face of significant life changes. It is an essential component of a well-rounded financial plan, protecting against one of life’s most challenging scenarios.
Legacy planning: life cover for dependents
The final stage of the progression curve focuses on life cover, which supports dependents after the policyholder’s death. This cover ensures that loved ones are financially secure, allowing them to maintain their standard of living even in the absence of the policyholder. Life cover is more than just a policy—it is about understanding its purpose. From a death point of view, the policies themselves are just solutions, but the why is important. Is it for your family to be okay? What’s the purpose of the cover?
In the end, financial planning is about more than just preparing for the unexpected—it's about creating a stable foundation that empowers your family to thrive, no matter what challenges come your way.
* Senekal is the distribution marketing manager at Old Mutual Personal Finance.
PERSONAL FINANCE