By: Bertus Visser, Chief Executive of Distribution at PSG Insure
Short-term insurance essentials for life
Life happens. Some things we can predict, plan or hope for, while others aren’t always as easy to foresee. Fortunately, short-term insurance can play a consistent role in keeping your longer-term dreams, and assets safe. Different life stages within each of our journeys require different short-term insurance solutions to truly cover all bases. Here are some main considerations along the way.
Moving out of home
A student moving to tertiary studies’ accommodation, or a starter apartment renting with friends, should check what is insurable in terms of a shared home. The same can be said about moving in with a partner. Keep proof of expensive purchases for electronic goods and ensure all the goods needing insurance, are covered collectively for their true replacement value. You may need to update the address where a vehicle is based; parents of student children should note this as well, as regular driver status may need to be updated on the car insurance too.
Buying a car
If you are paying a car off, insurance will be a standard requirement of the loan, but ensuring you can afford the required cover should always be factored into your decision to buy. Keep shortfall cover in mind too, which is there should the vehicle become written off, while you are still paying it off. As a car depreciates in value, in some cases insurance can be adjusted over time as the car value decreases. Be sure to keep maintenance in check, honouring your regular services, rotating or replacing your tyres as needed, and always following the rules of the road.
While there are many aspects to financial planning as a couple, or an individual within a couple, short-term insurance is key among them. Being able to protect your home, each of your vehicles and any of your contents, or devices like laptops and cell phones will really help, should an unexpected accident happen. You may need to insure both vehicles comprehensively if you switch cars, for example. Whatever your circumstances, insurance helps you to avoid needing to dip into savings if an emergency happens.
Buying a house
Bonded properties tend to come with standard insurance requirements, most importantly that the insurance is only for the structure. You can opt for your own insurer (it can be more cost effective to have all your insurable interests with one provider) if your bond insurer is satisfied the policy covers your risk. When choosing what property to buy in the first place, keep in mind that some properties near the coast may warrant higher insurance, due to climate change. Don’t purchase a home unless you know for certain you can afford to insure it, wherever you choose to buy.
The time will come when the property is paid off, but insurance is an ongoing expense. Without insurance in place, all your hard work paying your property off (or in the process of doing so) could very quickly come to nothing if a fire, or flood destroys your investment. This is why the correct replacement value of your home needs to be insured consistently, to cover you no matter what.
Starting your own business
A small operation may seem to attract small insurance risks; but this perception is rarely true. Having the right cover in place to consider your business interests at your primary residence, or a small office building you own is essential. Your whole business could come to a standstill if you can’t operate, so there are various levels of cover you can put in place, depending on your unique risks. If renting a workspace, you need to keep your contents and All Risk cover up to date as well.
A part of retiring often includes ensuring your home is paid off first, and it may mean that you downsize in the process. This will have an impact on your insurance too; factor moving into your budget, and remember you still have the same short-term insurance risks as someone who is still working. Insurance needs don’t ever truly retire.
Seeking some help
A financial adviser can assist you along the way, through any of the above life stages and others. Having a baby would change things, as would changing your job. It will depend on your unique circumstances as to what cover is needed for you. Considering the bigger picture while keeping insurance in place to protect it, makes all the difference to the outcome of your journey.