Short Term

SHORT TERM

Short term insurance is quite simply an agreement between a policy holder and an insurer. This agreement is binding for a limited amount of time or is flexible according to the individual’s circumstances. Basically, you are able to insure your car, your property, your household possessions or your person annually or on another short term basis. The great thing about short term insurance is that it caters to your changing needs, allowing you cover for your assets without the long-term commitment to one house, one car or one standard of living.

Some people believe that they can save enough money to replace their assets should anything happen to them. The problem is that, in most cases, the expenses incurred after an accident, the death of a loved one, or a disability are beyond any savings or wealth that a person may have accumulated and it is for this reason that short term insurance is such an important component of your financial planning. Purchasing short term insurance cover is more economical in the long-term than having to use your savings to pay for the loss or damage of assets, especially when it’s a costly expense.

Ideally, insurance pay-outs should ensure that you don’t incur any additional expenses at the time of the incident and that your financial position is relatively unaffected. Short term insurance is a financial contract that you take with an insurer to protect your movable assets in the case of damage or loss. The contract stipulates that the company will pay you a set amount of money, or will replace or repair your movable asset in the event of the damage or loss. The length of the contract may vary from one to 12 months.

There are many small scale instances where not having insurance can be a great inconvenience and may exacerbate your situation further, for example being robbed in a foreign country while travelling without travel insurance.  That could lead to you being stuck in that country without money. Or a simple geyser burst at home- without insurance you may have to clean up the mess and pay for the repairs out of your own pocket to replace the geyser and damaged carpets and ceiling.  These are just minor incidents and hopefully you will never have to find yourself in that situation, but the reality is that life does throw curve balls and you can never be over-prepared.

Inflation and the value of the Rand both have a big impact on the value of goods and especially items produced or imported from foreign countries, such as motor parts, jewellery or exclusive clothing brands. Imported vehicles and other assets that have been purchased overseas over the past year can cost as much as 30% more now simply due to inflation and the fluctuating value of currencies. This directly impacts the replacement value of items in the event of loss or damage, with the cost of replacing the item often being substantially higher. Conversely, depreciating values could also mean that items could equally be over-insured, depending on the value of the foreign currency.

Furthermore, the onus is on you to contact an accredited financial adviser to help you review your financial plan annually. In this way, you will always be insured with the most suitable cover. Paying insurance every month can seem like a hassle, and if you are lucky enough not to need to claim on your insurance, you may feel that you have spent the money for nothing.

However, when something does go wrong, having insurance will help you cope with the stress of the situation and enable you to cover the expenses without placing strain on your finances.

We can help you structure your short term portfolio, ensuring that you are covered when you need it the most.  Contact Us to set up an appointment.

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