Insurance should be part of your financial plan

The week is Financial Planning Week, reminding us about the importance of having a financial plan in place. What we should also keep in mind is that short-term insurance forms a key part of this plan.

“Having adequate insurance means that if something unforeseen were to happen, such as a car accident or a burglary at your home, you would be able to get back on track without derailing your financial plan,” says Bertus Visser, Chief Executive of Distribution at PSG Insure.

An average financial plan includes a strict budget dictating where your money goes. “Many people would really struggle financially if they had to suddenly come up with a considerable amount of money they had not planned to need,” Visser adds. “Insurance not only gives you peace of mind but will certainly make it easier to get through tough, unexpected situations.”

However, you need to have the right cover and there are some basics that everyone should consider. “Each person will require different cover depending on the types of assets owned, but the following types of insurance should always be on your checklist,” Visser says.

House insurance

If you own a home and are paying off your bond, house insurance would be compulsory. If you aren’t required to have it, you should consider how useful it is to have adequate insurance cover against a burst geyser, a fire or against theft. For landlords in particular, house insurance provides third party liability cover. “This is useful if, for example, someone tries to claim for an injury that occurred on your property.”

Contents insurance

Contents insurance is applicable to anyone who owns anything valuable – from your television to a favourite painting or a cell phone. “Even items like your fridge, couch and clothing are important to cover. Consider how expensive it would be to replace any of these if you were to fall victim to crime, fire or a natural disaster.”

Don’t only insure a portion of your assets, but instead make sure you are 100% covered. Failing to do this runs the risk of being underinsured, which means if you need to claim, you will be proportionately paid out.

If you are renting, it’s just as important to cover your belongings. “Your landlord is not liable if your television or laptop, for example, are stolen.” 

Car insurance

Of course anyone on the road knows how easily accidents can happen, as well as how costly vehicle repairs can be. “Consider what you would do if your car was not drivable. Without insurance, how would you afford a new one; how would you get from A to B?”

While paying for insurance can be costly, it’s much cheaper than having to pay entirely for damages and accidents yourself. “Be sure to get the right amount of cover you need and factor it in to your financial plan,” Visser concludes.

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