South Africans are struggling. Everyone is looking for ways to cut costs and save money.
Sadly, many people consider stopping their insurance cover as one way of doing this.
While doing this may bring some temporary relief, the consequences of this type of decision are only really felt when tragedy strikes.
Christo Stoman, the CFO of BetterSure Financial Consultants, has this to say: “The insurance gap in South Africa is a cause for real concern, with the Association for Savings and Investments South Africa (ASISA) recently confirming that many working individuals have a shortfall of at least R1 million in life cover and R1.4 million in disability cover.
“And, while it can be challenging to think about insurance when so many are juggling high food and fuel prices, it’s critical that South Africans have enough cover in place to ensure that their loved ones are financially protected against the unexpected events life may throw their way – whether that’s death, disability, being diagnosed with a serious illness, structural damage to a home, or the loss of possessions.”
According to BetterSure, to keep your home, and everyone and everything in it, protected, you need to consider:
Life Insurance
While life insurance is not typically thought of as a home insurance product, it plays a critical role in helping you take care of those closest to you.
Why do you need it?
Life insurance ensures that your bond and other financial needs, like your children’s education, are covered if you die, become disabled, or are diagnosed with a serious illness.
By making sure that you have sufficient cover and benefits, you can ensure that your family can stay on in the home you’ve created together if you’re no longer able to provide for them.
Homeowners Cover
Homeowners cover, or buildings insurance as it’s often called, protects the physical structure of your home against a range of insured risks that include damage caused by geysers, water, fire, landslip, floods or lightning, as well as malicious damage to the property.
Why do you need it?
Homeowners’ cover is a bank requirement and protects the roof over your head. When the bank gives you a loan, they do it against your asset – in this case, your home – which means that if your house is destroyed as a result of fire or another unexpected event, you’re still liable to pay the money back to the bank.
By making homeowners cover a requirement, the bank can then ensure that you have the necessary funds available to repair or rebuild your house, so that you’re not left paying back a loan for an asset that no longer exists. And that buys you huge peace of mind too.
Your home should be insured for its current replacement value – what it would cost to rebuild if it was destroyed. And if the replacement value of your home and the level of cover you have don’t keep up with inflation, you’re at risk of being underinsured.
While your insurer will increase the replacement value of your home in line with inflation, it’s your responsibility to let them know about any improvements or additions you make and to increase your level of cover.
Home Contents Cover
Home or household contents cover protects everything inside your home and, if your possessions are specified, it can cover them outside your property, too.
Why do you need it?
Having home contents cover in place means that if your belongings are lost, stolen, damaged or destroyed, you can afford to replace them.
It’s crucial to do regular home content re-evaluations, preferably every year, and to take factors such as inflation into account.
This way, you can be sure that your policy covers the full cost of replacing your possessions in the event of damage or loss.
With life insurance, homeowners cover and home contents cover, it’s important to make sure that you don’t lapse on any payments as this could impact your cover when it comes to submitting a claim.
It’s also critical that you maintain your property or home as this is one of the requirements for insurable risks.
The best advice I can give to South Africans who find themselves in a financial whirlwind, is to get to grips with your finances.
Make the conscious effort to know how much debt you have, how much insurance cover you have and what your overall financial situation is. You might find that you need help with this.
Don’t be scared to approach a financial advisor, a debt counsellor or an insurance provider. Ask all the questions you need to ask.
There is no time like the present to take control of your finances.
For more information on household insurance, you can go to www.bettersure.co.za