Managing the risk of over- and under-insurance
Having the right level of insurance is critical to your future financial security. Insurance helps you prepare for events that you don't see coming says FNB's Head of Consumer Education Program Eunice Sibiya.
Over insurance refers to when you buy more insurance cover than the cash value of your assets. When you are over-insured and something happens to your assets, the insurance company will only reimburse for the cash value of your damaged goods at that time. That means that your monthly budget comes under unnecessary pressure because you're wasting your money paying for insurance cover that you don't need.
Under-insurance - happens when you buy less insurance but your assets are worth a lot more If your valuable assets are damaged or stolen and you are underinsured, you will not be able to replace the damaged goods. You would either have to downscale the value of your replacement assets or, you need to downscale your lifestyle and carry the financial knock.
"You need to have the right level of insurance cover in place to help you and your beneficiaries maintain your lifestyles should anything unfortunate happenEunice Sibiya, FNB Head of Consumer Education Program
The best way to ensure that you are properly covered in terms of your long- and short-term cover is to make sure that you know exactly how much insurance cover you need. If you struggle to do the calculations of the cost of your valuable possessions yourself, then it is a good idea to speak to a qualified insurance broker.
A qualified professional can help you assess your lifestyle and provide you with insurance solutions that are appropriate to cover yourself from risks.
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