Treat insurance as a vital part of financial planning

As South Africa joins the global observance of World Investor Week 2025 (6-12 October), the South African Insurance Association (SAIA) has issued a considered appeal to consumers to broaden their understanding of financial wellness.

While budgeting and investment remain central pillars of financial planning, SAIA emphasises that non-life (asset) insurance is equally vital in safeguarding individuals and households against unforeseen financial shocks.

According to SAIA, non-life insurance, which includes cover for motor vehicles, homes, and business assets, plays a critical role in promoting financial resilience. It enables consumers to transfer the financial risk associated with unexpected loss or damage to an insurer, thereby preserving personal wealth and facilitating recovery. SAIA encourages consumers to view insurance premiums not as discretionary expenses, but as strategic investments in long-term financial stability.

“As consumers, we should not look at insurance premium as an expense, but rather a valuable component of our financial planning and management, as it provides peace of mind and protects us from financial worries when experiencing shock due to damage and/or loss of our valuable possessions such as our motor vehicles, homes and businesses,” says Zanele Gigaba, transformation manager at SAIA.

Despite its importance, SAIA says many consumers remain sceptical of non-life insurance, particularly in instances where no claims have been made. It says this perception often leads to the cancellation of policies during periods of financial strain. However, such decisions may expose individuals to significant financial risk.

According to SAIA, without adequate insurance cover, events such as vehicle accidents or home burglaries can result in substantial out-of-pocket expenses, potentially eroding savings and destabilising household finances.

SAIA underscores that insurance functions as a financial buffer, a mechanism that mitigates the impact of unexpected events and supports continuity. Premiums, typically a fraction of the insured asset’s value, offer consumers a means to transfer risk and secure peace of mind.

To assist consumers in optimising their insurance portfolios, SAIA recommends the adoption of the following prudent financial practices:

• Conduct regular policy reviews: Consumers should assess their insurance cover at least annually or whenever their circumstances change. This ensures that policies remain relevant and appropriately structured, helping to avoid under- or over-insurance, negotiate improved premiums, and remove cover for assets no longer held.

• Compare products across providers: Insurance offerings vary significantly. By comparing products, consumers can identify those that best align with their needs and benefit from features such as negotiated excess structures, loyalty rewards, and no-claim bonuses.

• Understand policy documentation: It is essential that consumers read and comprehend the terms and conditions of their insurance contracts. Engaging with brokers or insurers to clarify any uncertainties can prevent misunderstandings and ensure transparency during the claims process.

• Consolidate cover with a single insurer: Where appropriate, consumers may benefit from consolidating multiple non-life insurance policies under one provider. This can result in premium discounts and streamline administrative processes.

• Maintain and protect insured assets: Proactive asset maintenance can reduce risk and positively influence premiums. For example, regular vehicle servicing and the installation of home security systems may lower insurance costs. Keeping receipts and inventories also facilitates efficient claims processing.

• Request a premium review: Consumers with improved risk profiles or extended periods without claims are encouraged to approach their insurers for a premium reassessment. Responsible behaviour is often rewarded with more favourable terms.

Themba Palagangwe, general manager for governance and transformation at SAIA says consumer financial education is key to empowering consumers when engaging with the financial sector and promoting financial inclusion.

"Thus, SAIA remains committed to providing consumer education initiatives that seek to promote consumer understanding and confidence in engaging with the non-life insurance industry and its products and services," he says.

PERSONAL FINANCE