Policy Holders Warned not to Cut Short Term Insurance

June 12 - With economic times as tough as they are in South Africa, with many trying to find the extra cash to pay those debts, it becomes tempting to cut short term insurance policies. However, insurance experts are warning that this is not a good idea in the long run, and that policyholders should rather find other ways of saving cash, such as re-evaluating their policies.

Leone Enslin, the national short term insurancemanager of the Financial Intermediaries Association said: "Even though the average consumer is better educated about insurance, with many even putting together their own portfolio themselves, one needs to evaluate and consider all the potential consequences before just cutting spending. The dilemma facing most South Africans who are insured is that the reasons for them to have comprehensive short term insurance haven't changed. Crime, car accidents and so forth remain daily realities for all of us. This makes it extremely difficult to reduce one's cover significantly."

Enslin said that policyholders should evaluate whether they can personally afford to cover the costs of all the risks they intend cutting. She cited the example of a lost or stolen cell phone as a realistic cost that most of us can bear. However, she said that most of us cannot afford to replace our household effects or cars if they were stolen or destroyed.

"Your broker will be able to give you a realistic picture of the potential impact of your decision and take you through all possible scenarios," said Enslin. "This is critical for both your and your family's future financial wealth."