There are three types of insurance products that you should prioritise: life, health and short-term insurance, according to Schalk Malan, CEO of BrightRock

With life insurance, your income is your most valuable asset. Losing your income due to a serious injury, illness, or death will have a significant impact on all your financial responsibilities – from providing for your family and to all your other insurance needs.

New additions to your life like a baby, home, job or spouse should also be covered here, and there are products that are designed to be flexible enough for you to add cover for this. If you’re uncertain about your cover, ask an independent financial adviser to review this for you. There are new life insurance products available that are able to tailor your cover to each specific financial need, and change over time according to the need. This means you can get on average 40% more cover for the same premium rand, from day one by simply stripping out the waste.

In terms of health insurance, it’s important to at least have a hospital plan in place for you and your loved ones. There is a high demand for healthcare at government hospitals, resulting in long waiting lists. As a result of this, you might not receive critical or emergency treatments as promptly as you would at a private facility. A hospital plan will enable you to afford and access immediate healthcare at times when you need it most.

With short-term insurance you will be able to protect valuable assets where the loss of or damage to the asset has the potential to incur a severe setback in your personal finances. Your most expensive assets are likely to be your home and your vehicle, and damage to or the loss of either of these assets has the potential to lead to a major financial setback. If you own a vehicle and cannot afford insuring it, at least consider a third party insurance policy that will cover any liability on your part in the event of an accident. Once your home and at least your vehicle third party liability is covered and your budget allows it, consider more comprehensive cover – especially for items that you use or need on a daily basis with expensive replacement costs.

How do one’s insurance needs change through one’s life?

There are a number of important milestones in life that may increase the level of financial risk that you or your dependants may face if you should suffer an injury or illness, or die. These milestones include:

• Buying a major new asset that sees you incurring new debt, for example when you buy a house or a new car or take out a loan to start a new business
• Having or adopting a child or when there is a change in your dependants – for example, if you marry someone with children from a previous marriage, your financial obligations may increase substantially
• Getting married, again because your lifestyle and financial obligations may increase
• A significant increase in income – for example, if you’re promoted and your salary increases substantially, your lifestyle will probably improve and your insurance cover needs will therefore increase
• A significant increase in the value of your estate – for example, if you inherit assets from a relative, this increases the value of your estate but will also increase the estate duty payable on your estate

If you fail to review your cover when these major lifestyle events occur, you may find that your life insurance cover is inadequate to provide for the full extent of your or your beneficiaries’ actual financial needs at the time of your claim.

In terms of your short-term insurance, moving house or spending less or more time on the road can lead to significant changes in your premiums due to changes in your risk profile. That’s another reason why it’s important to review your policy schedule on a regular basis.

What are the primary areas that a person should focus on when reassessing their insurance each year? (i.e. premiums, the cover offered etc.)

Go through your short-term insurance schedule to see if any unnecessary items are covered, and make sure expensive additions to your household are covered. It’s always a good idea to contact two or three insurers to see if you can cut down your premiums – allocate some time for this in your calendar or ask your financial adviser to assist.

As for your long-term insurance, look at what’s covered – has anything changed in your life? Remember – new additions to your life like a baby, home, job or spouse should also be covered here, and there are products that are designed to be flexible enough for you to add cover for this.

How should a person approach their insurance company if they want to renegotiate their premiums?

The best way is to keep yourself informed and involved in your insurance policy and how it compares to policies from other insurance providers – this will empower you to negotiate. However, the complexity of some insurance products might not enable you to do this. An independent financial adviser can help you make the right choices for match needs for you, your family and your pocket.

Article credit https://www.all4women.co.za/1086937/money/money-matters/budget-wise-3-types-insurance-need-prioritise