South Africans â€œ45% underinsuredâ€
Media release: According to market research by the largest short term insurance company in South Africa, short-term insurance policyholders are under-insured by about 45% on average and are putting themselves at serious financial risk.
Santam Chief Executive Steffen Gilbert says, â€œThis means in terms of the insurance contract, a policyholder will only receive partial compensation after submitting an insurance claim.
â€œLetâ€™s assume that the replacement value of a personâ€™s house contents is R200 000, but the sum insured is just R110 000 and during a burglary R20 000 worth of goods are stolen. Because he is under-insured by 45 percent, only 55 percent of the loss, that is R11 000, will be paid out.
â€œNo-one wants to come up with cash when they are experiencing a traumatic time. Underinsurance can put people under severe financial strain.
Gilbert notes that the problem is that most people fall into the trap of under-insurance because they are unaware of the main pitfalls.
â€œNot insuring your assets at the correct replacement value is one of the main mistakes people make. The sofa that you bought five years ago for R1 500 might now cost R3 000 to replace. The contents of a house are insured at replacement value (vehicles are insured at market value). Therefore, you have to revise your policy at least annually to make sure that your cover remains adequate.
â€œAlso very important is for people to remember to insure the more arbitrary things too like curtain rods, curtains, bedding, loose carpets, books - in other words all your household goods an fittings.
â€œPolicyholders should also immediately add new purchases and gifts to their policy.â€
Gilbert concludes that you can either draw up an inventory yourself or employ the services of a professional broker who will be able to assist in valuation of house contents.
â€œOnce you've determined the accurate replacement value of your household items, you can ask your broker, or talk to Santam about amending your policy accordingly.â€
Lange Strategic Communications
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From The Glossary »
Family Income Plan:
| A combination of whole-life insurance and reducing-term (10-, 15-, or 20-year period) insurance of a predetermined appropriate amount. If the insured dies prior to the end of the specified term period, such as 20 years, a monthly income is payable for the balance of the specified period and at the end of the period the income ceases and the sum insured is payable.|
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