We know the beginning of the year can be difficult financially, but don’t be tempted to save money by cancelling your insurance - it provides good value for money and can protect you from financial ruin. Here are three good reasons to hold on to your cover this year.
1. The unexpected happensInsurance – long-term insurance such as life and disability cover and short-term insurance such as car and household insurance - could stop a financial loss from turning into a financial disaster.
Unexpected financial losses come in all shapes and sizes. Sometimes it is a health problem such as cancer, sometimes theft, and sometimes the weather steps in and causes damage that costs far more than you have in your emergency savings – just think of a hail storm that damages a few windows and the roof of your car!
Unfortunately, the unexpected becomes a reality for too many of us. According to stats from the Cancer Association of South Africa, South African women have a one in eight chance of getting cancer and South African men a one in seven chance. Latest crime stats show that for the 12 months ended 31 March 2018 there were over 111 000 cases of malicious damage to property, 228 000 burglaries at residential premises and over 50 000 motor vehicles and motorcycles were stolen.
Insurance cannot take away the trauma, but it can lessen the financial impact of these events.
2. Your premiums might be higher if you reinstate a lapsed policy or take out a new policyYou can take an insurance break and not pay your premiums - but there are consequences.
If you don’t pay your premiums your policy will be cancelled, which means you and your family won’t have cover.
And if you reinstate a policy or take out a new policy you will have to go through medical underwriting and you may end up paying a higher premium, especially for life, disability and dread disease insurance, because premiums are influenced by your age and health. So being older and potentially having a health problem could mean a higher premium or exclusion, which means you are not covered for a particular condition. Instead of paying R300 for R1.5 million cover you could end up paying R350 a month or getting cover of only R1 million for your R300 a month premium.
3. You might be able to negotiate a lower premiumInsurance is no longer a take it or leave it product. Most insurance policies today are flexible, and you can adjust your insurance policies to better suit your budget. All you need to do is chat to your financial advisor or insurer to see how you can adjust your cover to make it more affordable.
Insurers have tips on how you can reduce your risk, which can reduce your premium
Insurers have years of experience managing risk for thousands of clients – they can offer great tips on how you can reduce your risk, which can reduce your premium. It can be anything from driving better to stopping smoking.
A final thoughtRemember why you took out insurance in the first place – to protect your family against the financial loss an unexpected event might bring. Having insurance means we can take care of our families and loved ones. Don’t cancel your policies without discussing your options with your financial advisor and insurer.