Insurance

There are many different types of insurance available, and an equally large number of companies that offer it. Insurance can be divided into short term and long term insurance. Within each category are different types of insurance. Typically you will need to mix and match various types of insurance in order to be fully covered in all areas where you feel you may have a liability. It is advisable to cover yourself and your possessions as much as possible, without becoming over-insured and thus losing money. The best thing to do is to talk to a reputable and trustworthy broker or other insurance expert who will be able to guide you through the process, explain the various insurance options and give you advice on what insurance to take.

Short term insurance refers to all insurance other than life insurance. Short term insurance includes car insurance, household insurance, disability insurance, income protection, business insurance, medical aid, travel insurance, pet insurance, and so on. Your short term insurance needs will change over time as your life circumstances change. Short term insurance is thus taken out as you need it, and only for the time when you do need it.

Long term insurance usually refers to life assurance. This is where you insure your life for a specific amount, payable on the event of your death to whomever you nominate. You pay a monthly premium calculated by the insurance company. Some life insurance policies allow you to cash out the money that you have accumulated before you die, but this has to be part of the agreement from inception.

Insurance is essentially the business of risk management. Insurance companies create future risk models and work out very carefully how much they will typically have to pay in insurance claims, versus how much they can earn from investing the money that people pay in the form premiums. The difference between the two is the profit that the insurance company expects to make. For this reason, in years when outside factors cause an increase in the number of payouts (like an increase in car thefts), insurance companies will increase their premiums to offset the increased payouts. This is the major reason why insurance premiums appear to keep increasing.

Insurance Companies In South Africa