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Make sure insurance contributes to your financial health

Make sure insurance contributes to your financial health

A cornerstone of financial planning is making sure you have enough insurance and the right types of insurance.

There is a saying that we don’t think about an umbrella until we are caught in a rainstorm. It is the same with insurance: we seldom think about it until we need it, and when we do think about it, we often resent paying the premiums.

Insurance experts say every person, or family, should have five types of insurance:

• Life insurance
• Funeral cover (it can be part of life insurance)
• Disability insurance
• Medical insurance
• Vehicle insurance (if you have a vehicle, of course)

South Africans who work in corporate companies often have the benefit of company insurance that is part of the total remuneration package. Such cover can include all the categories above or only some of them.

Understand what you have

It is your responsibility to understand exactly what your company cover entails. This will ensure that you can enjoy the full benefit, but also that you can add to the company insurance if necessary. For instance, the amount of life cover you get as part of your remuneration package, might not be enough to meet your family’s needs when you are no longer there to provide for them. Conversely, when your children are grown up and have jobs, you need less life cover. Just as you can have not enough insurance, you can also have too much. Many of us have a number of different funeral policies, for example, but we don’t really know if they actually meet our needs. It is a very good idea to review your policies regularly to make sure you are either not paying too much or you are not as well covered as you thought you were.

How the insurance savvy

Here a few general points to remember when it comes to corporate insurance:

• Make sure you understand the terms of the cover. You can only get corporate insurance when you work for a company. Therefore, when you leave your job, the cover comes to an end. Take this into account when you do your career and financial planning.
• With all insurance policies, it is very important to keep the beneficiaries updated. If, for example, you get divorced, you might not want your ex-spouse to benefit from your insurance cover.
• Get clarity on your disability cover. It could be part of life insurance, or you might need to take out a separate policy to protect your income should you not be able to work due to a dread disease, such as cancer, or a disability that makes it impossible for you to do your job.
• Don’t be shy to ask for help. Someone in the HR department should be able to explain your corporate cover to you, and it could be very valuable to get an opinion from a financial advisor on whether you have the right cover and enough of it. Asking for advice doesn’t mean you have to buy a policy, so don’t give in to any pressure.

The right insurance cover can save a person or a family from financial trouble. It is, therefore, necessary and worth the time and effort to get a handle on your insurance position. It is an investment in your financial health.

Visit Bayport’s information centre has may more tips on what you can do to improve your financial health

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