Why short-term insurance should be part of your budget

As we settle into the year, managing finances should be a top priority. February is a good time to review personal budgets and consider the bigger picture when it comes to financial planning, while not overlooking short-term insurance.

Unexpected events can disrupt even the most carefully planned finances, which is why insurance isn’t just an expense, it’s a risk management tool that can help to safeguard finances in the event of unforeseen circumstances.

According to a report by the Minister of Transport, Barbara Creecy, South Africa has one of the highest rates of vehicle accidents in the world.

And when it comes to property, the risks are just as concerning. Having the right insurance in place allows you to focus on recovering rather than stressing over funds.

One of the key benefits of insurance is its predictability. Unlike many other expenses, insurance premiums remain relatively stable, usually only factoring in small, annual increases, depending on whether your risk profile has changed.

Effective budgeting isn’t just about managing everyday expenses, it’s about anticipating potential financial shocks and minimising the fall out. Here are the steps to take:

• Review your cover: Regularly review and update your insurance policy. Major life changes such as moving home or purchasing a new car, could impact your cover.
• Understand how much you pay: Make sure your premiums are factored into your monthly budget. If necessary, work with your insurer to adjust coverage for better affordability.
• Plan for the unexpected: Remember that insurance is not just an expense (even if it can be a grudge purchase that you might not need to use very often). Think of it as a safety net that brings peace of mind, as it’s impossible to predict when you might need it.