Insurance is one of those things you hope you’ll never need.
...but when something unexpected happens, having the right cover can make a major financial difference.
From protecting your family financially to covering your car or belongings, different types of insurance are designed for different risks. Here are five common types of insurance South Africans may want to understand.
Life insurance
Life insurance provides a financial payout to your nominated beneficiaries if you pass away while your policy is active.
It can help provide financial security for the people who depend on your income, particularly if you have children, a partner or other family members who rely on you financially. The payout could be used towards everyday living expenses, education costs, outstanding debts or other financial commitments.
The amount of cover you need will depend on your personal circumstances, including your income, debts and the number of people who depend on you.
Funeral insurance
Funeral insurance is designed specifically to help cover the costs associated with a funeral.
Funerals can be expensive, particularly when costs such as transport, catering, burial fees and other family or cultural arrangements are taken into account. Funeral cover usually pays out a predetermined lump sum following the death of an insured person.
Many policies also allow you to cover additional family members, such as a spouse, children or parents.
While funeral insurance and life insurance can both provide a payout following a death, they serve different purposes. Funeral cover is generally intended to help with immediate funeral-related expenses, while life insurance is designed to provide broader financial protection.
Vehicle insurance
If you own a car, vehicle insurance can protect you against the potentially significant cost of an accident, theft or damage.
There are different levels of vehicle cover available. Comprehensive insurance generally offers the broadest protection, potentially covering accidental damage to your own vehicle as well as theft and damage you cause to another person's property.
More limited options, such as third-party cover, may only cover damage you cause to somebody else's vehicle or property.
Your premium will usually depend on factors such as your vehicle, where you live, your driving profile and the level of cover you select.
Home and contents insurance
Your home is likely to contain thousands of rands' worth of furniture, appliances, electronics and other belongings.
Contents insurance can help protect these possessions against specified events such as theft, fire or certain types of accidental damage, depending on your policy.
Building insurance is slightly different. It covers the physical structure of a property and is particularly relevant for homeowners.
When taking out cover, make sure your belongings or property are insured for an appropriate replacement value. Being underinsured could mean receiving less than you expect when making a claim.
Credit life insurance
Credit life insurance is linked to certain credit agreements and can help repay some or all of an outstanding debt when specific events affect your ability to pay.
Depending on the policy, this could include death, disability, serious illness or loss of income.
It is important to understand exactly what your policy covers, what exclusions apply and how long benefits may be paid.
Choosing the right insurance
Insurance shouldn't simply be about having as many policies as possible. It should be about protecting yourself against financial risks you wouldn't comfortably be able to absorb on your own.