Buying insurance can get complicated – here’s how to simplify the task.

Follow these three rules:

    • Only buy insurance to protect you from unlikely events.
    • Only buy enough insurance to maintain your existing standard of living.
    • You don’t need insurance for events that won’t severely strain your finances.

Shop around

Every insurance company assesses risks differently. Get as many quotes as possible and investigate the terms, conditions, inclusions and exclusions of each company. Read the small print and comments mad by other people about the services they’ve received. Before deciding, make sure you fully understand what your needs are and what your budget is.

Online quotes don’t give exact figures. If you don’t want to shop around on your own, an independent insurance broker can advise you on what insurance you need and which company would best meet your needs.

Types of insurance

    • Life insurance. If a loved one depends on your salary, then life insurance is essential. If you die prematurely without proper coverage, your family may be unable to pay the bond or buy groceries.
    • Disability insurance. If you had a crippling accident or were diagnosed with a critical illness tomorrow, would your family be able to cope? Insurance against an accident or disease that prevents you from working is arguably even more important than life insurance.
    • Home insurance. When buying insurance on your home, use an independent broker who deals with a number of insurance companies to get the best price. Don’t lump your home insurance with your bond repayment – you’ll be paying extra interest. Your policy has nothing to do with the value of your property, it only provides the funds to rebuild your home or repair its structure if it gets damaged.
    • Home contents covers the cost of replacing your belongings up to a set amount. Save money by only insuring expensive items and using the same company for your home contents and car insurance.
    • Car insurance. Rates vary according to your age, vehicle type, driving record and from company to company. You can either have third-party or comprehensive insurance. It’s best have comprehensive coverage unless your car is so old that the increase in premiums when making a claim exceeds the value of the vehicle. Comprehensive insurance covers damage to your vehicle resulting from an impact with another vehicle or object, including the hit-and-run in a parking lot, theft and vandalis.
    • Health insurance. The cost of even a minor operation makes having a medical aid, hospital plan or health insurance essential. Health insurance pays a daily fixed sum on the overall costs while you or a dependent is hospitalised. A medical aid, on the other hand, is legally required to pay for the medication and treatment of 25 chronic illnesses plus hospitalisation. A hospital plan covers private hospitalisation costs. Compare these options carefully with the help of a broker or obtain quotes online.

 

Sources

www.medshield.co.za
www.moneysense.ca