It’s always a good idea to review your insurance at least once a year or when there’s a material change to your lifestyle. As you kick start the year, consider using the quiet time to set yourself up for a great start to 2017. Take stock of your life, critical illness, disability, home, motor and healthcare covers and ensure that these policies still meet your needs – as you change jobs, move homes, welcome a new family member, send children off to varsity, and get older.
“Speak to your financial advisor who has the experience and qualifications to make sure you spend wisely and get the insurance coverage that most closely matches your needs,” explains Saks Ntombela of Hollard. “Just like in any crisis, when the time comes to claim you want the confidence that all your bases are covered. When you think about it, insurance is there to protect what you value the most – your loved ones, your life, health, ability to earn an income, your home, vehicles and all your hard-earned belongings. Given their importance, you don’t want to make decisions that could compromise any of them,” adds Ntombela.
As South Africa’s largest privately-owned insurance group, Hollard provides some helpful insights into how you can fine-tune your insurance cover, without compromising your peace of mind.
Consider these handy tips on what to talk to your financial advisor about:
- When it comes to your financial security and that of your loved ones, you don’t want to have to learn any lessons from a bad experience. Chances are your mistakes will only come to light at claims time, when it’s too late to fix them. Find a financial advisor who you trust and who can offer you the right benefits and budget for your needs – and get it right first time round.
- About serious illness and disability cover. The bills won’t stop coming if you become seriously ill or disabled and unable to work. You need to ensure you have a financial plan if either of these were to happen to you.
- Change in family status. Birth, the death of a family member, marriage, divorce or child leaving home. These events often indicate the need to increase or decrease your life insurance cover.
- Any significant changes to your health. Did you stop smoking or lose a significant amount of weight? Have you come off any chronic medication? You could qualify for better rates on your life, critical illness and disability covers.
The important things that you need to check and update:
- Beneficiary information. When you die, the proceeds of your life insurance policies go directly to your nominated beneficiaries, bypassing any instructions made in your will. It’s, therefore, a good idea to check that you’re named beneficiaries in your will and your insurance policies match up to avoid any complications in settling your estate. Remember that if your children are younger than 21, they will not be able to receive any death benefits directly – an adult or a trust must be named as the beneficiary to handle the money on any children’s behalf until they are adults.
- Policy cessions. Life policies are often ‘ceded’ to financial institutions as security for a debt such as a bond, loan or overdraft. This means that you temporarily transfer the rights to the life policy to the bank for as long as you have the debt. This is a simple way of ensuring that any money you owe will be recovered by the bank from the proceeds of the life policy in the event of your death. It’s important to cancel these cessions with the bank once your debts have been settled and to nominate your new beneficiaries such as your spouse or loved ones, as the law provides that the cessionary will be paid before any other beneficiaries. Even if there is no outstanding debt, the cessionary will receive payment first and it could take weeks to get the matter resolved, during which time your loved ones might not receive any financial relief. The status of cessions should be part of your annual financial review.
- Update your motor insurance. There are many aspects that affect your motor insurance premium – from the make and model of your vehicle, through add-ons such as mag wheels, tow and side bars and sound systems, automatic car hire in the event of an accident, what the vehicle is utilised for, your age and the length of time you’ve been driving, and even your credit rating. Check what your excess is – you can often save money by accepting a higher excess (but you need to be sure that you can afford to take the additional risk). Check whether you are comprehensively covered or if you need to take additional, whether for dents and scratches or for mechanical breakdown – don’t assume that you are automatically covered for everything.
- Review your home contents inventory. The start of a new year is the perfect time to check whether your list of home contents is up to date, or at least make sure that the amount for which you are covered reflects the value of these contents (some policies do not require a comprehensive asset list). Check your policy wording – you may need an accurate description of certain items if you ever need to claim. You might even discover that you’re paying for cover on items you no longer own! When it comes to adding any new belongings and gadgets you may have received for Christmas, ensure that items that may leave your home (such as cellphones, tablets, cameras and so on) are specified under the ‘All Risks’ section of your policy.
- Make sure you comply with your policy conditions regarding minimum security such as a burglar alarm, burglar bars and security gates. And remember that, like with changes to your health, any upgrades to your security could mean you qualify for a lower premium, so notify your insurer.
- Buildings cover. With home building costs continuing to rise, the replacement value of homes has increased – what you bought your home for ten years is vastly different to what it would cost you to replace it at today’s building costs! Make sure your sum insured is enough to cover you for replacement at today’s prices. Remember that alterations to your home almost certainly add to its value so check that sums insured are still sufficient.
- If you’re buying a new home, consider getting a home warranty. When you’re stretched to the max with deposits, bond and transfer costs, municipal deposits, moving costs and so on, the last thing you need is unplanned bills to fix hidden defects. Hollard’s Home Warranty protects you from the financial costs of repairing defects that emerge in a purchased property up to two years after taking a transfer. It’s an insurance policy coupled to a professional property inspection that gives you the confidence that the property you are buying is free from hidden defects – if something happens that is related to a defect not specifically excluded in the property inspection list, your Hollard Home Warranty will cover the cost to fix it. And the cost of the warranty is covered by the seller – all you have to do is ask for it in your Offer to Purchase.
“The types and amount of cover you need will always depend on your own personal circumstances. All the above pointers support the need for sound and professional insurance support. Whether you take cover to protect your income and financial obligations, to protect your home and cars, or to leave a legacy and lifestyle security for your loved ones, make it your new year’s resolution to get properly covered, at the right price, and make 2017 your best year yet,” concludes Ntombela.