Retrenchment protection can be a lifesaver 

With retrenchment becoming an unfortunate reality for more South Africans, would you have enough savings to provide for your family and meet your financial obligations if you were to lose your job unexpectedly? If not, retrenchment protection can be a valuable financial cushion: it pays out a portion of your income each month for a certain period after you’ve been retrenched. This allows you to get back on your feet and find new employment without incurring further debt – or defaulting on existing debt you may have.

We’ll help you with a financial cushion if you need it

At Cornerstone, our team of experienced financial advisors will help you weigh up your risks when it comes to possible retrenchment – and then help you and your family prepare accordingly. With a retrenchment policy in place, you’ll get a guaranteed tax-free income while you aren’t working that closely matches the income you need to meet your financial obligations. As an example, the Old Mutual Protect Retrenchment Cover product  includes the following benefits: 

• Monthly payments if you’re retrenched that cover 60% of your monthly income, with a limit of R30 000. 
• A lump sum benefit of 12 times the retrenchment cover amount or larger than the retrenchment amount (accidental cover is included, along with no medicals), or an income benefit that is equal or larger than the retrenchment cover amount.
• The option to increase your cover over time to account for inflation, where you can choose either an inflationary or fixed rate (0%, 5% or 10%). The cover escalation that applied during your premium payment stage will continue to apply in the claim stage. 

To qualify for retrenchment protection, you typically need to have been continuously employed in a permanent full time job for at least two years – and some providers require you to have been with the same company for a portion of that time. There’s also usually a waiting period of around six months from the start date, which also applies to cover increases (though only on the increased portion). The policy won’t typically pay out in cases of:

• voluntary resignation
• dismissal due to misconduct
• unemployment due to a fixed-term contract ending

Linking to another policy

Most retrenchment protection products aren’t standalone, but rather need to be linked to a parent benefit, such as an accidental death or accidental death and disability policy. In the case of Old Mutual’s retrenchment cover policy, you should always have this main benefit in place in order to have retrenchment cover: when the main benefit is no longer active, your retrenchment cover will cancel automatically. We have the broad insurance expertise to help you structure a parent benefit according to your individual financial needs and the risks you may face.