How to survive the budget and not lose out on insurance protection

The Minister of Finance’s budget this year came against a background of renewed load shedding, continued pressure on household budgets and the prospect of increases in electricity and other tariffs in the offing. However, having a financial tightrope to walk in an election year will probably mean that there will be no significant additional tax announcement shocks in the offing.

Pressures on consumers’ disposable income will remain, however, and juggling income to meet financial obligations will be important for most consumers. At these times it is vital, says Dr Nolwandle Mgoqi-Mbalo, MD of Standard Insurance Limited, that every cost is weighed up and carefully considered before cuts in expenses are made.

“When times are tough it is natural for people to examine their spending and look for areas where they can cut back. Inevitably, insurance costs are considered. The natural temptation is to either cancel or downgrade insurance coverage or assume more personal risk by removing assets like vehicles off domestic schedules. Avoiding this knee-jerk approach is vital because of the potential consequences that could result.”

It is crucial, despite prevailing economic conditions, that consumers continue to protect their incomes, homes, households and other assets by being prudent and not cutting back on insurance to loosen up cash for other monthly bills. Insurance expenditure should be viewed as an essential part of personal financial planning as it can mean security for the family if things do go wrong.

“There is no doubt that it is a time to be financially prudent. It’s equally important to ensure you are not left in the lurch when something unexpected happens in your life,” says Felix Kagura, Head of Long Term Insurance Propositions at Standard Bank.

Getting Salary Protection cover, for instance, ensures individuals receive a salary should they be retrenched or unable to work for a short period due to illness or injury.
“If you’re temporarily unable to work due to retrenchment, payments for up to six months will give you time to find another job as conditions improve – and if you’re permanently unable to work due to illness or injury, insurance will give you a monthly pay-out up to the age of 65,” explains Mr Kagura.

The process of making sure that your insurance cover is tailored for your needs is by:

• Asking the right questions before signing up for a policy so that challenges and disappointment are avoided when it comes time to claim or get a payment.
• Looking at motor policies and seeing what terms and conditions apply. It is often possible to save by taking advantage of offers like low mileage discounts and the reduction of optional insurance on old cars.
• Investigating increasing deductibles – the amount you pay out of your pocket in the event of an insured loss – as this can reduce premium costs for those facing a cash crunch.
• Bundling policies with one provider.
• Taking additional safety and theft prevention measures to ensure lower premiums.
• Maintaining a good credit history is more important than ever. You must ensure you have adequate credit insurance is in place to prevent bad debts

“However, remember cheaper isn’t always best. It is important to shop around and compare quotes. Price must be considered, but ultimately the benefits outlined in a policy are what counts,” says Dr Mgoqi-Mbalo.