Written by Claire Moorhouse and Jade Kramer

What is Wealth Protection – and how does it affect my Financial Planning and Wealth Creation goals.

At Overberg Asset Management, we are more than just a wealth manager, we are a trusted custodian of generational wealth and prosperity. With a legacy of expert investment management since 2001, our services are designed to enhance and safeguard your financial future.

Overberg Asset Management and its team of Wealth Managers aim to ensure that we assess our clients’ financial planning needs both holistically, as well as across family generations.

Wealth creation

Wealth creation is a journey during which one accumulates wealth/assets over one’s lifetime. Investments play a substantial role in wealth creation. Investments are generally linked to the financial markets which over long periods of time normally increase; however, they can be very volatile.  Markets move in cycles and do not increase in a consistent manner. The current market cycle has been interrupted by two Black Swan (unusual) events, that have impacted and de-stabilised global markets, these include the Covid 19 Outbreak, and 2 wars.

As we all know, life has many unexpected undesirable events, that we did not anticipate, and there will be many peaks and troughs along the way. These events may occur at a time when one has not been able to accumulate sufficient wealth. A large part of our responsibility as financial planners is to assist our clients with keeping their “head above the proverbial line” along this journey. Refer to the illustration below.  This is why we aim to ensure that we place as much emphasis on Wealth Protection (a topic that can so easily be overlooked), as we do on Wealth Creation.

Wealth Protection

Wealth protection simply put – is a way to protect your assets and income through your different life cycles. Risks impacting your wealth include investment market volatility, taxes, inflation, and unforeseen circumstances like illness or disability and even lawsuits.

Protection may involve diversifying investments, obtaining insurance, creating trusts, establishing emergency funds, and implementing estate planning techniques to create tax efficiency and ensure the preservation and transfer of wealth to future generations.

We often find conversations are centred around the topic – what do you consider your greatest asset?  The answers often include assets such as houses, car etc. However, the answer is much simpler – YOU are your greatest asset. Your ability to earn an income is what pays for your living costs, including the car you drive and the food you eat. If something were to happen to you, how long would you and your family be able to survive without an income? Can you afford, not to insure yourself against these risks.

Personal Risk Policies/Long-term insurance cover

Personal Risk Policies/Long-term insurance cover is important at both an individual and business level. Each person has different needs and should consider which polices/insurance products will suit them taking into account their life stage. For a young person, estate planning may not seem as important as monthly income protection.  However, an older individual who has dependants might prioritise estate planning and therefore prioritise life insurance to cover his/her estate taxes. Holistic financial planning allows us to assess and meet our client’s needs, wherever they are in their life cycle.

Do you have personal risk cover polices in place.

If so, are they necessary and relevant to your current life cycle. When you are young, your most valuable asset is your ability to earn an income so that you can plan and invest for your financial future. Income protection/Disability cover and Life insurance is very important at this stage.  However, an older individual who has dependants, might prioritise estate planning and therefore consider life insurance to cover his/her estate taxes.

When last were your policies independently reviewed

As you get older your financial (including family responsibilities), will change requiring a rebalancing of your risk cover. You may be under or over-insured.  You may for example be paying too much on risk premiums every month, that could be better utilised by contributing to your investments and thereby increasing your wealth. Another matter to consider is whether your will aligns with the personal risk cover you have in place. This is why it is so important that your financial plan is constantly reviewed as your circumstances change.

Key benefits of risk cover

Life insurance: This offers financial protection to your dependents in the event of your death. It can provide a lump sum pay-out or regular income to your beneficiaries. Life insurance is particularly significant if you are the primary breadwinner for your family or have significant financial obligations/debt. It is also a key feature of an estate plan, as it can be used to pay estate duty and/or other debts on death. Estate Duty is levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% on the dutiable value of the estate above R30 million.

Disability Cover/Monthly Income Protection: Provides income replacement if you are unable to work due to a disability or injury.

There are two options and depending on one’s circumstances, generally there is a balance to be found in having a combination of each in a client’s personal risk portfolio.

  • Lump Sum Disability: This is a one-time payment if you become fully disabled/partially impaired. While this provides for the potential of a larger upfront payout, it does not provide a continuous income stream.
  • Monthly Income Protection: This benefit can cover your (net) monthly income on a temporary basis or continually until the selected retirement age. It can help cover your living expenses, medical bills, and other financial commitments during your period of disability. Essentially ensuring that you can maintaining a standard of living without depleting your savings or investments.

Critical/Severe illness Cover: Critical illness insurance pays a lump sum if you are diagnosed with a serious illness covered by the policy. This benefit often covers more than 100 medical conditions, with just a few examples being Cancer, Diabetes, Arthritis, and Hypertension.

This lumpsum can help cover medical expenses, treatment costs, and additional financial burdens that may arise due to your illness. Critical illness insurance provides financial security during a challenging time and allows you to focus on recovery without worrying about the financial impact. When considering this cover, it is very important to ensure that the wording of the policy allows for 100% pay out on less severe conditions and reinstates for unrelated conditions.

Business related life insurance

This type of life insurance is often required by various businesses and/or business owners and may be used by smaller businesses or listed companies. The benefits may include improved succession planning, upholding shareholder value, maintaining market perception, and addressing certain debt obligations. There are two main types of insurance taken out on the lives of the business owners and/or key executives.

  • Key Man insurance policy taken out by a business on the life of a key employee. It provides financial protection to the company in the event of that key employee’s death and/ or disability. Cover is taken out by a business, and the policy is owned and paid for by the business, the life assured being the key person.   
  • Buy and sell insurance is an insurance that business co-owners take out on one another’s lives to enable them to buy a deceased or disabled co-owner’s share in the business, and thereby creating certainty regarding the future ownership of the business.

Rest assured

Our team of wealth managers will guide you with specialised advice around wealth creation, preservation, and distribution, ensuring the most beneficial strategy for your unique circumstances, allowing you and your family to sleep well.

We pride ourselves in customised support, and this month we would like to invite you to reach out to our wealth managers and personal risk specialists. The personal risk specialists, Claire Moorhouse and Jade Kramer will skilfully assist you in the assessment of your wealth protection requirements.

Contact Us

Spend some time with our team to find out which one of our portfolios is best for you.


We understand investing is about more than just wealth. Allow us to help you chart the course.

Unsure about something?
Feel free to contact one of our experienced team members with your queries.

Please complete all fields:

Local/Global Query