With the National Budget being unveiled this month, managing finances should be every household’s top priority. While income and expenses are usually the main focus, there’s one critical aspect that often goes unnoticed – short-term insurance.
In a country where unexpected events can disrupt even the most carefully planned finances, insurance isn’t just an expense; it’s a vital part of risk management. It can help safeguard finances in the event of unforeseen circumstances like car accidents, home damage, or theft, preventing these incidents from turning into long-term financial burdens.
South Africa has one of the highest road accident rates globally, with over 10,000 fatalities in 2023 alone, according to a December report by Transport Minister Barbara Creecy. Many survivors face costly repairs or write-offs, leaving them without reliable transport and compounding their difficulties.
Property risks are equally concerning. Natural disasters, fires, and other unforeseen events highlight the need for adequate insurance, as such incidents are rarely anticipated. Without cover, these events can cause significant financial hardship.
One of the key benefits of insurance is its predictability. Unlike many other expenses, insurance premiums remain relatively stable, with minimal annual increases depending on whether your risk profile has changed. This gives you a clear picture of your monthly financial commitments. Including insurance costs in your budget allows you to plan more effectively while avoiding unpleasant surprises.
Car insurance and home or contents cover might seem like optional extras at first glance. But the reality is, there are so many unpredictable events that could derail your plans – from someone else causing a car accident that results in major repair costs for you, to managing the expenses out of pocket if you had to replace all your belongings after your geyser bursts and floods your property. Without proper cover, you could be financially exposed.
Given South Africa’s economic challenges and the unpredictability of daily life, having a comprehensive financial plan is more important than ever.
A few simple steps to make insurance a core part of your financial plan:
- Review your cover: Are your insurance policies up to date and aligned with your current lifestyle and needs? Major life changes, such as moving or purchasing a new car, could impact your cover.
- Understand how much you pay: Make sure your premiums are factored into your monthly budget. If necessary, work with your insurer to adjust coverage for better affordability.
- Plan for the unexpected: Remember that insurance isn’t just an expense; it’s a safety net. Budgeting with the peace of mind that you’re protected from significant financial setbacks allows you to plan properly.
Making insurance an integral part of your budget is not just wise; it’s essential. By taking proactive steps now, you can build a more resilient financial future, no matter what life throws your way.
Article credit Short-term insurance is crucial – Bloemfontein Courant
