December should be a time of rest and relaxation – but for South African investors, the month comes with ominous memories. ‘Nenegate’ and Zuma’s infamous cabinet reshuffle, the Steinhoff collapse and several other rand-slaughtering incidents occurred in the month of the year when everyone was hopefully on holiday; plus the ANC elections occur next December too.

So, what is an investor to do when the last month of the year rolls around and disaster strikes? In the words of Douglas Adams’ The Hitchhiker’s Guide to the Galaxy: don’t panic.

The first thing to do is remember the bigger picture. Many tend to look at the short term. For example, the rand recently dropped below the R14 benchmark to the dollar due to America’s elections and its divisive results, which is positive for the Rand strength. The same person looking at this news is likely to panic if, say, President Trump signs an important new trade agreement and the dollar strengthens or geopolitical risk in South Africa causes the rand to falter.

This will cause anxiety and is also an inaccurate way to view the market. Markets do not work off individual events, but rather longer cycles of bull (growth) and bear (decline) periods. Globally, we are coming out of a very long period of bullish growth. Since 1 January 2009, after the 2008 global financial crisis, the MSCI World Index has come up 292 percent, according to Sygnia Asset Management. This means we are in for a long bear period that has little to do with fluctuations caused by what President Ramaphosa says in his next speech.

The second thing to do is breathe and to remind yourself that all things work in cycles, including the market. We have just come out of a period of high growth globally, but all good things come to an end. So do all bad things. If we are entering a bear market now, that will surely give way to a bull market in due course. It’s also comforting to note that, as Sygnia Asset Management points out, bear markets have historically been shorter than bull markets.

The third thing to do is remind yourself that every season has its usefulness. Many investors focus on the selling aspect of investing that can be such a rush and godsend in the sunny outlook of a bull period. However, a bear market is often when the best opportunities are found at the most reasonable prices. Avoid the temptation to sell out of an emotional place of anxiety when slow growth sets in, and you’ll reap the rewards from all those others surrounding you who sold when the price was low. If you aren’t panicking, you don’t need to make that mistake.

Lastly, give it time. Your portfolio wasn’t built in a day and, if you act rationally, it won’t topple in one day either. All downturns work themselves out and the good investors play the waiting game while they do. It’s all about time in the markets, not timing the markets.

It’s that time of year again, when loved ones begin asking: ‘what do you want for Christmas?’

Your PA is also going to look at you with expectant eyes in terms of what gifts to order for clients, seniors in the company and such. Answering ‘nothing’ is not going to get you very far with either and, so, we’ve compiled a list of the coolest gift ideas that’ll equip and excite for work in 2019 before it’s even begun.

A VR headset
Virtual reality is the future, as we know, and this gift gets serious kudos for being both productivity-enhancing and escapist at the same time. A good headset will cost a few hundred bucks, but it’s so worth it. Any decent model is compatible with most smartphones and you can download content easily from the Apple or Google app stores. The newest VR headsets also have things like adjustable lenses, a soft eye cushion and augmented gaming function to keep you having fun for hours.

A Moleskine Evernote Smart Notebook
The brightest people are ideas people, likely to get hit with a moment of inspiration in the most unlikely places. You need some way to get those thoughts down before they evaporate, and everyone who’s anyone has at least one Moleskin, and now you can up your gift-giving game by presenting clients with an Evernote smart notebook. These Moleskins allow you to write on paper but still have digital backups of your scribbles by simply taking a photo.

A magnetic cellphone holder
For something smaller but still unique, why not try a magnetic mobile device holder? Only costing a couple of hundred bucks, it looks seriously cool seeing your phone stand up by itself on your desk and, at the same time, is useful in that it doesn’t contribute to that inevitable office clutter. The force is strong with this one…

A subscription to Audible.com
Thought leaders are notoriously voracious readers, while at the same time being too busy for anything as sedentary as reading a book. If you want to up your thought leadership status – or help someone else do the same – an Audible subscription is a great way to stimulate your mind with all the latest great reads while stuck in traffic.

A change is as good as a holiday, and a holiday is a good place to start a positive change. For those lucky enough to be going away at the end of this year, we’ve rounded up some of the books the world’s brightest sparks are raving about to get you feeling excited about 2019 while still on your sun lounger.

Anything you want: 40 lessons for a new kind of entrepreneur
This short book is jam-packed with horizon-expanding ideas and out-of-the-box thinking written in a simple way that’s not overwhelming. You’ll find yourself pumped up instead of daunted. It’s an enormous bestseller for a reason, and light enough on both your suitcase and your overtaxed mind.

The Happiness Project
A great pick-me-up but still a non-fiction book in which you’ll learn something, The Happiness Project is a sunny, upbeat book full of practical ideas on how to be more happy while living your best life. Author Gretchen Rubin speaks on practical things like how to fight in an emotionally healthy way, organising cupboards and singing even when you don’t feel like it in a non-preachy way that’ll put a smile on your dial.

The Motivation Myth: How High Achievers Really Set Themselves Up to Win
Sometimes we pummel ourselves to work harder, when productivity isn’t really the problem. If you like peering into the cogs of how things work psychologically, this one is for you. Ghostwriter, speaker, LinkedIn Influencer and author, Jeff Haden says you can make yourself more motivated in simple ways, no need to beat yourself up.

Essentialism: The Disciplined Pursuit of Less
If 2018 has left you feeling a little overwhelmed, this wonderful book is different to many productivity manuals: it’s not about cramming more into your day but discovering what truly matters in terms of productivity and doing that excellently.

However you plan to spend your downtime this season, remember these words from Confucious; “No matter how busy you may think you are you must find time for reading, or surrender yourself to self-chosen ignorance.”

Various factors, such as employment prospects, family situations, lifestyle choices and investment goals, come in to making the decision about whether to buy or rent a home.

In any market, there are different reasons for why you may choose to do one or the other, as there are good arguments for both renting and buying that depend on individual circumstances. Here is a brief overview of the options in today’s climate.

To Buy

In South Africa, there is generally a culture of preferring to own a home, as purchasing a property is widely considered to be a sound medium- to long-term investment decision. Furthermore, buying a property allows you to enjoy lifestyle benefits, such as decorating to your tastes, owning a pet, and generally doing as you please.

That said, South Africa is currently experiencing a stagnating property market in which the annual growth in house prices is slowing. Taking inflation into account, it would seem that the growth of property prices is actually in decline.

These days, people are understandably becoming more cautious when it comes to buying property. However, although the residential property market is correcting itself — most notably in the Western Cape where property prices had previously increased by 650% in certain areas in the past 15 years — some property managers believe that it is still best to buy, and to get a foot on the property ladder as soon as possible.

Interestingly, the Western Cape is still the top performing regional market, and had a 10.6% price increase from January to June 2018, while the national average was only 4.25%. Furthermore, the slowing of price appreciation in some of the hotspots has had the effect of boosting the market in other parts of the city.

It is important to gather as much information as possible on which to base your decisions, especially when it comes to investment properties, as margins have become much slimmer. However, if finances are tight, a potential option is to rent a house for you and family to live in, while investing in a more affordable apartment, which you should then be able to rent out at approximately 0.5% of the purchase price. This way, you can get a foot into the market, while enjoying a monthly income stream and long-term capital growth on your investment.

It is also possible to create further wealth by upgrading or refurbishing your property, then selling it and buying a more expensive property. However, it’s important to decide carefully what you spend on your home, as you need to consider what will add value for a potential buyer. It’s worth seeking advice from experts if you are unsure. Also bear in mind that, according to Dr Andrew Golding, CE of the Pam Golding Property group, “the old saying that it is better to purchase the cheapest house in an expensive suburb, than the most expensive property in a lesser area, remains true.”

It is also important to take into account the upfront costs involved when purchasing a property, such as the deposit, transfer duty, legal costs, homeowner’s insurance, bank charges and municipal rates. Not to mention the maintenance costs and any levvies that you may need to pay once you are a homeowner. You should also be aware that if you have a bond, the interest rate can fluctuate too.

To rent

An increasing number of people simply don’t have the means to buy a property, and the rental market has benefitted from a generation that is financially not yet able to purchase their first home. Renting can be especially attractive as it does not come with additional expenses, such as rates, taxes and maintenance, which fall on an owner.

However, there are other reasons for why you may choose to rent rather than buy, which are not related to affordability. For example, many people want the flexibility and ease of mobility that renting provides.

Renting can also be a good option if you are returning to South Africa, but are still unsure of where you are going to work or what your future plans involve. Furthermore, renting gives potential buyers a ‘recce’ opportunity so that they can first get a feel for an area, its security, and its access to local amenities, frequented places and transport links.

Renting also buys you the time to do a thorough property search so that you can eventually purchase a suitable home at an attractive price, without having the pressure of needing to urgently find somewhere to live. It will also give you time to analyse potential growth opportunities of different properties and locations.

If you do wish to rent, it’s important to ensure that you have a written lease that covers payment, duration, and all the landlord’s and the tenant’s obligations. Before you sign anything, be sure that you are happy with all negotiations, and that all agreements are clearly stated in the lease. Be aware that a rental contract will often be fixed for at least six months or a year, so be sure to stipulate if you require anything different.

If you keep the property in good condition and honour all your obligations in a timeous manner, you should have no issues in renewing a contract or being reimbursed your deposit. However, the downside to renting is that losing your deposit is always a risk, monthly rental can be expensive, and you will need to ask permission to make any changes to the property.

Whatever you decide, it’s important to do proper research on an area and a property before committing to renting or buying. And it’s also advisable not to over-extend yourself when making a decision — be aware that the rental costs are likely to increase each year; as will levvies, insurance and rates if you purchase a property. Don’t hesitate to arrange a meeting to discuss whether buying or renting a home would be best for your financial situation right now.
Information for this blog was sourced through Fin24.co.za.

A real estate investment trust (REIT) is a company that finances, operates or owns real estate that produces an income, and is a way for investors to have a liquid stake in the real estate market.

According to Nareit, which is the representative voice for REITs, more than 225 REITs were trading on an American stock exchange earlier this year. At the start of 2018, a quick look at diversified REITs suggested that 23 were yielding 5% or more, with market capitalisations of greater than US$1 billion. And that was only when reviewing one sub-sector of the industry — if you took into consideration other areas, such as retail and office, the number increased to 60 REITs.

Given the vast array of REITs available, it can be hard for investors to know which one to choose. However, while the attraction to REITs can be strong — especially as they are required by law to distribute at least 90% of their annual taxable income to shareholders — not every REIT is worth its salt. Even if one has a dividend yield of 5%+, it doesn’t necessarily mean you should want to own it.

To hedge or not to hedge?

Cross-border real estate investment is becoming more popular as more people develop their understanding of the role that real estate can play in a multi-asset class portfolio. Many investors have also become aware of the potential diversification benefits that can be gained from international real estate exposure.

However, it’s important to appreciate the complexity that currency can bring to the table when it comes to investing in property. Returns can be hugely impacted by currency movements, and performance can look very different when measured in different currencies. For example, over the course of 17 years, one global property index’s annualised total return was 7.4% in its local currency, but if measured in South African Rand, the total return would have been 11.2%, and in Swiss Francs, it would only have been 4.9%.

If you do have a foreign currency exposure, it is, therefore, important to carefully consider how you intend to manage your exposure. Certain risks can potentially be mitigated through currency hedging. According to an article published by the Pension Real Estate Association (PREA) “forwards, swaps, and options are some of the commonly used instruments for hedging currency risk in a real estate portfolio. Some investors may also borrow in foreign capital markets to reduce their foreign exchange exposure. However, the latter approach may simply substitute financial risk for currency risk, and the cost of borrowing offshore may be higher. Certain large global investors may also see their portfolios as sufficiently diversified to provide a natural hedge and not actively hedge at all.”

You may also wish to consider other factors, such as when is the right time to hedge and what should be hedged. And it’s also worth considering the cost and regulatory hurdles when it comes to managing currency risk. Many decisions are not always straightforward, but it’s important to be aware that currency volatility could become a source of investment risk as real estate becomes more global in nature.

Although many investors appreciate the unique nature of REITs, it’s important to only invest in REITs that you’ve thoroughly researched. In order to protect your principal, try to find a REIT that comes at a price that allows for a safety margin against market risk. It’s also advisable to not consider a REIT that could potentially cut its dividend, and be sure to pay attention to underlying cash flows.

If you’re interested in REITs that can serve you in good times and bad, you may wish to look for stocks that provide an income while minimising risk — for example, stable business operations that have good balance sheets. Although the yields from certain REITs may not make you super rich, they can still reliably contribute to your financial goals and wealth portfolio. Don’t hesitate to arrange a meeting if you wish to discuss the value of real estate as an income-generating investment and how to best manage your cash flow.

(Information gathered from Forbes and InvestorPlace)

According to recent statistics, 5.5 million South Africans travelled abroad in 2016, showing that travel has become a part of many people’s lives — be that for business or leisure. A vacation can be an enriching experience that allows us to step away from our daily lives to relax and, enjoying it with added peace-of-mind is an added bonus!

Remember, just because you’re on holiday doesn’t mean that you can’t avoid events that are outside of your control, and can occur anywhere in the world at any time. Travel insurance gives you the peace-of-mind that you are covered in the event of disaster so that you won’t be burdened with the extra stress of expenses you can’t meet.

Travel insurance will offer options to cover common travel issues, such as lost luggage, cancellations that are out of your control and, most importantly, medical emergencies. Think of it in the same way as car insurance, and protect yourself and your family when you travel in case things go wrong.

The cost of a small medical procedure abroad could easily deplete an entire holiday budget. Bearing in mind that hospital bills can easily run into (hundreds of) thousands of Rands if you are visiting countries without public healthcare, such as the United States. Travel insurance also provides a certain degree of protection against currency fluctuations, as any claims incurred will be paid in the currency of your destination, even though you pay for your policy in South African Rand.

What does it cover?

You may find that basic travel insurance is provided by your bank if you buy your flight on your credit card. However, this type of cover tends to come with some restrictions, so may not be sufficient depending on certain factors, such as your age or travel destination.

Most comprehensive travel insurance policies provide emergency medical cover; death and disability cover; legal assistance and personal liability cover; luggage cover; and losses incurred as a result of unpreventable cancellation.
However, do be aware that not all policies are cut from the same cloth, and a specific type of travel insurance — such as for business purposes, senior citizens, or groups — could better cater to your needs.

It is, therefore, important to do your research when looking for cost-effective cover, and to examine your insurance policy (and the small print) carefully to determine exactly what is included. Do also be sure to check how much excess you would have to pay if you did need to cancel your trip.

When comparing policies, it’s advisable to first decide exactly what level of cover you will need, and make sure that you won’t be left under-insured for the things that count. It may be tempting to opt for the cheapest insurance, but a few extra Rands could potentially save you a lot of money in the long run.

Depending on where you are going, you may also want to purchase extra cover to ensure that you are covered if, for example, an act of terrorism occurs that puts you at risk or changes your plans. However, do note that some travel insurance providers will refuse to cover you if you are travelling to a disaster-prone area, or a country where there is political unrest or a health epidemic.

Adventure activities, such as skiing, mountain biking and scuba diving, come with an element of risk so, if you intend to hit the slopes or the sea, it’s important to be insured for any accidents and injuries that may occur. Having the maximum amount of emergency medical cover is worth the investment if you are planning to do anything that could be dangerous. You may also have expensive sports equipment that is worth insuring too.

Domestic travel insurance

Don’t be complacent when it comes to travelling domestically, as accidents can still occur on home ground. South Africa is a big country (the Kruger National Park alone is the size of Israel!) and you can still end up in trouble when you’re a long way from your usual comforts and contacts.

It’s a good idea to tailor your insurance package to meet your needs, so that you can be protected and save money in the case of any unfortunate events. Residents travelling around the country stand to greatly benefit from a policy that is specifically designed to address the concerns of South African travellers, such as car rental excess waivers, and cancellation and curtailment cover.

Plan for the unexpected this holiday season, and purchase your chosen policy as soon as you have paid for your trip. This won’t cost you a Rand more, but, so long as cancellation cover is included, it will mean that you’ll be protected from the minute you’ve bought it. That said, if you still haven’t purchased travel insurance for your December leave, it’s not too late — as long as you arrange it before you step onto the plane! Don’t hesitate to arrange a meeting if you need more advice on the matter or information on your financial situation.

(Information gathered from all4women.co.za and moneysupermarket.com)

Many South Africans choose to take advantage of the public holidays and the warm weather by visiting loved ones or going on an adventure over December and January. However, expenditure over this festive season can quickly add up if you’ve planned a well-deserved break.

It, therefore, can be worth renting out your house for the season, so you can supplement your spending while you are away. Nowadays, short-term rental websites, such as Airbnb, make it relatively easy to rent out your home to holidaymakers, and receive an extra income for little extra effort. It’s a superb idea — however, take a look at these considerations before you open up your home.

Although ‘tis the season to be jolly, this period does, however, come with a few less-merry considerations to bear in mind.

For example, during these summer months, there tends to be higher risk of break-ins. Although there are numerous benefits to renting out your home while you’re away — such as earning an extra income and not leaving the property unoccupied so that it is vulnerable to a break-in — there are also other potential risks that you need to protect yourself against as a homeowner. For example, you could well come back to find items missing or damaged, or to see that part of your property has been vandalised.

If you do not have sufficient insurance to cover you, renting out your house could end up costing you dearly and setting you back for the new year. Be aware that typical home insurance may not provide cover for any damage or theft that could occur while your home is being rented to strangers. As theft cover on a standard personal policy requires forcible entry, it is unlikely that you would be able to claim for anything that is stolen by a guest. If you are planning to let out your home this holiday season, it is, therefore, crucial to carefully read the terms and conditions of your insurance policies to ensure that you understand the extent of your cover.

As short-term letting will generate a revenue, it is also technically considered to be a commercial venture, which means that you may require more comprehensive insurance for the associated risks. As well as protecting your physical possessions, you should ensure that you have liability cover in case a guest injures themselves on your property during their stay. Otherwise, you could be held liable as the owner, which may have some serious cost implications.

If you do decide to rent out your home while you’re away, bear in mind that you may be hosting travellers who have different habits to you. This could result in a nasty surprise when you return from vacation, so you should consider various ‘worst-case’ scenarios for insurance purposes.

Don’t hesitate to arrange a meeting to discuss how you can make this holiday season as financially viable as possible. Furthermore, be sure to have sufficient cover in place so that you can enjoy peace of mind, as well as a potentially greater income stream this holiday season.

(Info from fanews.co.za)

Although the demand for holiday homes in South Africa lost some momentum at the start of last year, according to the FNB Holiday Town House Price Index for February 2018, a renewed year-on-year growth acceleration was demonstrated in the results of the last half of 2017.

In fact, the demand for holiday homes in South Africa has remained reasonably buoyant since 2013, and many property investors purchase a holiday home as a way of diversifying their wealth portfolio and creating an alternative source of income.

Or, for some, a holiday home is quite simply just that — a holiday home. A precious escape away from the hustle and bustle of city life; a safe haven where your only responsibility is not burning the tjops on the braai.

Whatever your reasoning, buying a holiday home does come with its own unique set of considerations that don’t always apply to other types of properties. For the sake of your finances and sanity, it’s worth considering a few important factors before you make your purchase.

1. Maintenance
As idyllic a location may be, and as much as you may fall in love with the thatched roof of a fisherman’s cottage in Paternoster or the rounded gables of a Cape Dutch house in Stellenbosch, don’t forget to factor in maintenance and the costs involved, especially when it comes to older houses.

If you’re only going to be using the home for holidays, it may well remain vacant for periods of time, so it’s important that you either buy something in a good state of repair or set to work to fix any issues. Otherwise, you could be greeted by a crumbling building when you finally do get the chance to unwind, and will spend precious days of vacation time honing your DIY skills.

And if you do plan to let out the property while you’re not using it, then bear in mind that it will need to meet tenant requirements and maintain a competitive edge in the market.

2. Rental income
If you are planning to buy a holiday home to create an income stream, it is important to be aware that short-term rental earnings may be seasonal rather than steady, depending on the location. If you buy a holiday house in Camps Bay, for example, you may well enjoy full occupancy from December to April, but should be prepared for quieter winter months when the cold Atlantic waters aren’t quite as appealing.

Your rental income may also be influenced by public holidays, school holidays or religious festivities. It is, therefore, worth preparing in advance and planning your own use of the house around these peak periods, so that you can maximise your rental income and make up for losses whenever it is vacant.

If you are planning to use the property for your own leisure then it’s important to communicate with a rental agent in advance when the home won’t be available to let.

3. Location
Although the thought of hiding away from the world may appeal to you after being stuck in the office and in traffic, bear in mind that a house in the middle of nowhere may attract a narrower pool of tenants or holidaymakers. The location may also affect your home’s re-sell value. So, while that farm off the beaten track near Loeriesfontein may seem like a great idea when you’re feeling worn out by the daily grind, it may not be such a good idea as an investment.

Bear in mind that not everyone has a 4×4, so it’s also important for the property to be accessible, as well as in a good location. A popular area and nearby attractions will all work in your favour when finding tenants or a future buyer, and it’s also worth trying to understand what tourists visiting the area are interested in. For example, people who go on holiday to the coast are likely to want a good view of the sea. If possible, it may be worth creating a best-of-both-worlds situation where you can enjoy a certain idyll or lifestyle, while still being in reach of amenities and activities that will attract other people.

4. Finances
When it comes to buying a holiday home, it’s important to retain your investment as well as enjoy the element of escapism. Praven Subbramoney, CEO of Private Bank Lending at FNB, notes in an article published by All4Women that many “holiday homes are financed like any other investment property. Therefore, an ideal option would be that of a structured loan, as it provides secured finance for property acquisitions that allow investors to borrow against a mixture of asset classes such as a combination of property, shares, cash or investment portfolio.”

Don’t hesitate to arrange a meeting if you wish to discuss your options and review your situation to decide whether a holiday home may be a good investment for you — both personally and financially speaking.

(Info sourced from all4women.com)

Good health care is not always easily obtainable and quickly becomes a costly experience. Many people who have health cover policies sometimes expect to have more cover than their policy actually includes, and they are saddled with high shortfall bills; they land up paying the difference between the medical cover rate, and the cost of the specialist.

This is because having medical aid doesn’t necessarily mean that you will be fully covered for all treatments. This is because, every year, medical aid providers establish a base rate that can be charged for all procedures, and your medical aid plan will pay a percentage of this rate. A good plan can pay up to 300%, but many specialists or private hospitals charge more than 300%, which can often result in a shortfall that needs to be covered. For example, if a surgeon charges 350% of the base rate and your medical aid covers 300%, you will end up with an additional 50% that needs to be paid.

What is gap cover?

Although small, adhoc amounts can be manageable if a non-urgent issue arises, an accident or the sudden onset of an illness can leave you with no time to save, and you can be left needing to cover a hefty shortfall.

To protect yourself in the event of an emergency, gap cover can be as important as medical cover. Gap cover could be considered as a top-up medical insurance that is designed to pay the difference (the gap) between what a private doctor charges and what your medical scheme pays.

You can only take out gap cover if you already have medical aid, but only one policy is usually required to cover a member and their dependants (as long as they are all on the same scheme with the same options). It can, therefore, work out very affordable if you have several dependants.

What is covered?

Although premiums can still be relatively cheap and benefits can be extensive, times are a-changing when it comes to gap cover, so it’s important to be aware of exactly what is covered. According to an article published on Fin 24, gap cover insurers have needed to curtail their expenditure to remain financially viable in the face of increasing private healthcare costs. After all, insurance schemes are run for profit, and gap cover is an insurance product that complies with the regulations of the Short-term and Long-term Insurance Acts, rather than those of the Medical Schemes Act of 1998.

Gap cover used to pay the difference between what your medical scheme paid and your total medical bill, which meant that even if you had the cheapest hospital plan, you would be covered in full if you had gap cover. However, this also meant that the largest share of medical costs often fell on the shoulders of gap cover providers, instead of medical schemes. Gap cover providers have been known to carry up to 80% of costs, and such heavy shortfalls have meant that full gap cover payment is no longer often sustainable in the long-term.

Consequently, many gap cover providers have introduced new calculations as to how much of the co-payment they will cover, through a match-pay system based on your medical scheme. Depending on your policy, some providers agree to pay up to five times what your medical scheme has paid, while others will only pay up to twice the amount. So, if your bill comes to ZAR20,000, of which your medical scheme will cover ZAR5,000, your gap cover will pay ZAR10,000 if it pays twice the medical scheme contribution. You will still then need to pay ZAR5,000 by yourself. It is, therefore, worth having a medical scheme that pays out as great a percentage as possible of the base tariff, as this will affect how much will be covered by your gap cover too.

It’s also important to note that gap cover will only cover the shortfall on approved specialists or procedures, so it won’t cover something that is excluded by your medical aid plan. Although having gap cover is still highly worthwhile, it’s best to ensure you are informed about what your gap cover policy will likely not pay for, such as upgrades to a private room, wheelchairs or crutches, and cosmetic procedures. Do also read the fine print because there could be some delicate nuances, such as dental treatment may be provided, but only in hospital.

Given all the exclusions and new calculations, it is important that you have a detailed understanding of what your medical aid covers and how your gap cover will work in conjunction with this. If you have any health concerns, the last thing you need to worry about is whether you can afford to receive the appropriate help, so it’s advisable to be as extensively covered as possible when it comes to medical treatment in South Africa. Don’t hesitate to arrange a meeting if you wish to discuss whether you can afford to put (or not put) your family on a gap cover plan.

Towards the end of every year, many medical schemes announce their annual contribution increases for the following year. This makes these last few months of 2018 the perfect time to review your cover and make any necessary amendments, as, until the start of December, most medical aid providers will allow you to change plans or options without penalties.

Alternatively, if you are not happy with your provider, you can even go as far as to switch medical schemes, just be prepared that a new scheme may come with a waiting period of up to six months (during which time you will only be covered for emergencies), and may also charge you higher premiums or penalties, depending on your age and circumstances.

Your medical cover requirements can easily change from year to year — financially and medically speaking — so it makes sense to take this opportunity to review your plan and understand how you are currently covered and whether that is still appropriate. Granted, it’s hard to predict how much you may incur in terms of future medical expenses, so it is difficult to know which plan to choose. However, that is why it’s important to review your medical cover annually to ensure that your plan is in line with your health concerns and budget.

If you aren’t sure about whether you should change your options, start by first calculating how much of your medical expenses over the past year was covered by your medical aid. Once you have worked out this amount, you can then decide whether it would work out more cost-
effective to pay a higher monthly contribution in return for more benefits, or switch to a cheaper option and simply pay more out of your own pocket if the need arises.

If you are relatively young and healthy, you hopefully won’t require much medical attention next year, so it may be worth considering a low-cost option. However, if you are older, suffer from a condition or have a precarious family medical history, it may pay to upgrade.

Money issues

As contribution increases for medical cover tend to be above the Consumer Price Index inflation rate each year, affording adequate cover can be a concern for many people. The good news is that medical schemes and day hospitals are trying to collaborate in order to tackle the high cost of healthcare in South Africa. Procedures at a day hospital are less expensive and you can avoid any unnecessary overnight stays that can end up adding a lot to the bill.

It’s also a good idea to make the most of any opportunities that your medical scheme offers to improve your general wellbeing. Most schemes nowadays offer wellness programmes and reward you for living healthily. If you can be proactive and stick to a programme, the benefits can compensate for some of the costs of your cover.

If funds are currently tight for you, be sure to at least have a hospital plan, which will cover you for certain chronic conditions and hospital admissions. By law, even the most basic of medical schemes should also provide Prescribed Minimum Benefits (PMBs) that will ensure you are covered if you have a life-threatening or chronic condition that is on the PMB list. However, you may need to meet certain requirements before some schemes will cover you.

You could also choose a network option, which is cheaper but means you will be limited to certain healthcare providers within a network. This means that if your nearby hospital or GP isn’t a member of the scheme’s provider network, you may need to change doctors or be prepared to travel further to have an operation or see a specialist. However, the cost of some network options is calculated based on your monthly earnings, so they will come with lower premiums if you’re not currently earning a comfortable salary.

You could also choose an option with a medical savings account, whereby up to a quarter of your monthly contribution goes into the account and the full savings amount for the year will be available from January. Once you have depleted the funds in your savings account, you will need to fund any further medical expenses. So if you don’t feel that a savings allocation will be sufficient to meet your needs, you may be interested in getting threshold cover, whereby any unused savings each year will roll over.

If you do wish to consider changing plans or options, be sure to thoroughly review all benefits and conditions. Take the time to understand how your cover will change, and it’s advisable to contact your provider to clarify all details. For example, if you change to a lower-cost option, it’s possible that you may no longer be covered for certain medication or treatment, such as antidepressants or anxiety medications; or you may be covered for a different brand of medication to that which you previously used.

Don’t hesitate to also arrange a meeting to discuss your financial situation so that you can decide what steps you can afford to take with regards to your medical cover.

(Info from iol.co.za)