Don't let payout become pitfall

COVER: WHY A LUMP SUM IS ONLY A START; HOW FINANCIAL ADVICE TURNS IT INTO LASTING SECURITY

- 

Insurance companies say not enough people have critical illness cover that pays out if you have a critical illness but it is an even bigger problem that most people go to the trouble to take out this important cover have no idea that you must have plan for the money or windfall as some see it.

In the aftermath of a major health event, such as cancer or a heart attack, the last thing most people are prepared for is making financial decisions, but for those who had the foresight and guidance to take out severe illness cover, this is also the moment that careful planning pays off, says Enrico Louw, general practice principal at Old Mutual Personal Finance.

What do you do when a life-changing, tax-free sum lands in your bank account, unrestricted in use and immediate in impact?

Louw says when your life changes overnight, the right advice can restore not just financial balance, but dignity and direction.

"It is at this precise moment that financial advisors step into their most critical role. This is not just where they add value, but where they prove it," he says.

"The claim has been paid. The diagnosis is real. The decisions from here on will shape your recovery, resilience and future security. This is where the plan comes alive and not on a spreadsheet, but in action. It is about translating uncertainty into clarity and a payout into a purpose."

In his experience, Louw says many consumers are unfamiliar with managing large sums of money and are often uncertain about what to do once the payout lands in their account.