Insurance in all its forms – home insurance, car insurance, income insurance, and medical insurance – is the best protection from the unexpected events that take place in all our lives. Considering the value of our homes and vehicles, and how much we rely on our monthly incomes, a surprising number of people still don’t have adequate insurance cover – in fact some people don’t have insurance at all.
If you’re currently not insured, it’s probably due to one of two reasons: insurance premiums may seem like a monthly expense you just can’t afford at the moment, or like many uninsured people you may genuinely believe that luck is on your side – here is an example that may give you some perspective on the importance of insurance.
Where household and vehicle insurance are concerned, you’ll soon see the point of taking out a policy if you consider how your lifestyle would change if you had to replace your vehicle or the contents of your home. Most people take years to pay off their vehicles and furnish their homes with furniture, appliances, and electronics – could you really afford to start from scratch and replace these items if they were stolen or destroyed by fire or flood?
Insuring Your Income
While your assets and valuables would cost a fortune to replace if they aren’t insured, have you considered what would happen to your lifestyle if you lost your job or couldn’t work due to an injury or disability? Because most people rely on their full monthly salary, or most of it, to cover monthly expenses, a loss of income could have very serious effects on your lifestyle – you could even lose your home if you can’t make your bond payments.
To secure your lifestyle through good times and bad, taking out disability and unemployment insurance is essential. It’s also important to have medical aid or health insurance so that the cost of illness and medical treatment doesn’t eat into your savings.
Are You Fully Insured?
When you assess your insurance situation – a process that should be undertaken with the help of your financial advisor – make sure that you keep the following points in mind:
- Is every part of your lifestyle covered? Make sure that you have vehicle, home, disability, unemployment, and medical insurance.
- Are you underinsured? Having an insurance policy that won’t pay out enough to cover your losses may seem affordable due to low premiums, but will it be of use to you when you need it?
- Are you over-insured? Make sure that you are not over-insured as this will cause you to pay higher-than-necessary premiums.