How long does the RAF take to pay out your claim?
The question of how long the Road Accident Fund (RAF) takes to pay out your settlement is a question we often get and thought it prudent to share the answer.
In our experience, we have found that it takes the RAF 150 to 180 days to pay out your RAF claim from the date of your settlement. The date of your RAF pay out will further depend on the rand value of your settlement. Larger settlements may take longer to pay out than smaller RAF pay outs.
The best advice we can provide is that you consult with your attorney regarding a more accurate date of your RAF pay-out. Alternatively, please check the RAF FAQ page for updates to their payment schedule: Claims FAQ – Road Accident Fund.
Once you have received your RAF payment, the next step is to decide what to do with it. We covered it broadly in our previous article on Financial Health: GETTING YOUR RAF PAYMENT AND WHAT HAPPENS NEXT…
Here are a few tips on what you could do with your RAF pay-out:
This is in no means an exhaustive list, but the aim is expose you to some suggestions on what to do with your RAF payment. After you have read below, please take your own personal circumstances into account and decide on your investment strategy.
The items below are listed in the order of importance:
This means you use your RAF pay-out to settle as many debts as you can. Start with the most expensive debt first. For example, credit card debt, personal loans, vehicle financing and lastly bond (house) debt.
2. Buy an asset
Once your debt is settled, look at buying an asset that will either lessen your current expenses or provide you with an additional income. A good option is residential property. You can then either live in it yourself or rent it out.
Just make sure to live within your means so as to not buy a property too expensive. That could potentially leave you without any liquid funds in times when you need emergency funds. When disaster stuck you might be forced to sell the newly purchased property in order to deal with the emergency. In many instances this could lead to selling the property at a discounted price to what you have paid for it!
3. Obtain a fixed income investment
A fixed deposit or Money Market instrument with a traditional bank can provide you with a fixed income per month. Usually the drawback is that your funds are not completely liquid. This means the funds are tied up with the bank for a set period of time.
This is a less risky option than renting out a property as you do not have the risk of dealing with non-paying tenants, but then again the return would also be lower. There are however other options available that provide a higher return than the banks, for example private institutions.
If this is something you are interested in, just send us an email and we will put you in touch with a reputable institution.