“People insure to prevent financial or emotional ruin”, says the managing director of the short-term insurance broker Integrisure, Arnold Van der Linde.
Some people believe in “self-insurance”. Every month they set aside a couple of hundred Rand in a special account in the hope of building up a piggy bank for a rainy day. Others only partially insure and prefer to carry certain risks and consequences themselves.
“The truth is that insurance buys peace of mind”, says Van der Linde.
It’s all fine and well to have your own saving system, but to think it can replace insurance entirely however, is nothing short of wishful thinking.
Even if one were to set aside R300 per month for two years, a mere R7 200 will have been saved. The average claim for a motor vehicle accident these days is around R18 000.
An average housebreaking stands at around R25 000. This means that one would need to save for over three years without a single claim to cover this loss. Of course, when one starts talking about writing off a car worth R200 000 or a home being cleaned out completely it would take 27 years to accumulate the kind of nest egg that would cover such losses!
It is impossible for an individual to fortify themselves against big problems with their own saving system. By being a part of a reliable insurance structure, one is protected by the relative relationship between the financial muscle power of the collective.
Thus, people who look at their monthly premiums and think they’re wasting money, especially if they don’t claim, really need to re-evaluate their thinking. Insurance puts them in a position to rest easy in the knowledge that there will be no financial crisis should anything serious happen the next day.
Short term insurance has two major benefits: firstly, there is the monetary restitution in the case of losses or damages for insured goods to be replaced, and secondly there is the added bonus of around the clock peace of mind.
People spend enormous amounts of money to safeguard their homes that they may live in peace and safety. In a way, short term insurance can be seen as a part of the burglar-proofing, a safety wall protecting you and your family from emotional and financial crises as well as stress.
“The world is full of wise-guys who’s lives have been ruined by poorly considered decisions”, says Van der Linde.