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Why insurance is not a grudge purchase but a necessity

Most of us think about insurance as a thorn in the side of our budget. We have debts to pay and a lifestyle to support. We don't like paying monthly premiums because we could use that money to further enhance our lifestyles.

However according to FNB Head of Consumer Education Program Eunice Sibiya, insurance is extremely important to your financial well-being because it covers you from unexpected, sometimes extremely heavy, costs.

According to Eunice, insurance is an important factor when it comes to managing your finances because it presents you with the opportunity to mitigate your financial risks and help you achieve your personal and financial goals.

To effectively cover all your risks, you need to understand the difference between short-term and long-term insurance cover.

Short-term insurance provides you with financial protection for your possessions, assets or other material possessions. This includes assets such as, cars, buildings, the contents of your home, jewellery and any other valuable possessions that you may have.

Long-term insurance, on the other hand, covers immaterial assets. For example, it prepares you and your loved ones financially for events that may derail your lifestyle. Long-term insurance includes life, disability, dread disease, funeral and credit life cover.

Insurance is not an investment. It's a necessity that ensures you are always covered should something happen

Eunice Sibiya, FNB Head of Consumer Education Program

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