Insurance can feel like a waste of money when you don’t need it, and the best investment you’ve ever made when you do. Let’s look at how to choose insurance that is right for you.
Insurance is something you do to protect yourself from an unwanted outcome. You take an umbrella because you don’t want to get wet in the rain, for instance. Or you put on sunscreen to protect your skin against cancer.
In financial terms, insurance protects you from financial losses. You have a policy on your vehicle so that should you be in an accident, you don’t have to fork out all the money for repairs. Similarly, you have life insurance so that your family will have money to live on should you pass away. Funeral policies serve the same purpose – the policy pays for the funeral so that family members don’t have to.
Deciding on insurance often involves fear. What if I don’t have enough funeral cover? What if my children cannot go to school should something happen to me? The best way to deal with this fear, is to base your decisions on information.
However, not all these categories might apply to you. If you don’t have a vehicle, you obviously don’t need vehicle insurance. Similarly, if you don’t have any dependants, you don’t need life insurance either. If your children are still small, you need to make specific provision for their education, but if they are adults that is no longer necessary.
South Africans who work for 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.
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.
Just as you can have not enough insurance, you can also have too much. Many of us have several 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.
Insurance is a necessary element of financial wellness. It is worth your time and effort to learn enough about it so that you can get the cover you need at the right price.For more information visit: Information Centre Go back