If you are starting your career, you may be thinking about getting
insurance to protect your possessions. In the spirit of Youth Month, to help
you avoid insurance pitfalls that can cost you dearly as a young professional.
Receiving your very first pay cheque as a young working professional can
be a liberating yet daunting experience. Imagine the pride of buying your first
car, a pair of name brand sneakers, a designer watch or the newest smart phone
with the money you have earned. Adequate and comprehensive insurance policies
are key to protect these possessions.
Anything valuable and considered an asset, can be insured.
The feeling of buying the thing that you worked so hard for is
priceless, but there is a very real risk of loss in today’s world, so it is
important to remember that as you step up and step out of the home, that you
look after that which you have worked hard to get.
Below are five lessons to be learnt about insurance, before starting your
career – both good and bad.
1. Understanding the terms & conditions of your policy
Insurance is there to protect you when things go bad; so, it is very
important to firstly, make sure you get insurance, also ensure you understand
your policy schedule and the policy wording when you buy a policy.
If you don’t, or if you don’t take the steps to make sure you are
properly protected, you must accept that if you experience a loss, such as with
a car accident or your smartphone is stolen, you will still be liable to pay
monthly instalments, but won’t necessarily have the item anymore.
If you have insurance, understanding the terms & condition of your
policy is important. You must be aware of what you are NOT covered for and
having the cheapest cover is not necessarily always the correct approach. Value
for money and peace of mind when you need it most is critical. The cheapest
cover available may come with consequences.
“For example, the insurance with the lowest monthly premium may mean a
very high excess at claim stage. Or worse, if you experience a loss, only then
do you find out that you are underinsured. If you want to save money in the
short-term, understand that it may cost you at claims stage if you have an
2. Do your homework and due diligence
This is why it is important to take the time to make sure you understand
your insurance policy. A vital question to ask, is whether the sum insured will
adequately cover you to replace or repair your belongings in an event of a
claim and put you back in a similar position prior to the loss.
It is a good habit to annually check with your insurer that your assets
are correctly insured.
“To avoid being underinsured when claiming, do an annual assessment as
you scale up your possessions. As we upgrade to smart living in this digital
world, take a picture of the receipt and send it to your insurance company or
broker, or upload it on your insurance app, so that they can add it to your
policy. Use the digital inventory calculators to update the cost of your
insurable assets, it is essential that you keep updating the list of assets
that you have with your insurance provider.
You will also need to check with your insurer that they adjust your
premium on those items which as items depreciate. For example, motor vehicle
“Many insurers now do this automatically without you needing to check in
with them, so it is worthwhile to confirm this as part of your due diligence.”
To add to this, it is important to know that the more you claim, the more
expensive your premium may become.
3. Consider top up or add-on products to protect you
If you recall your very first car purchased – Probably a Toyota Tazz or
equivalent back in the day, – which was an easy choice because it was in high
demand and would be relatively cheap to maintain.
If it was financed, you were not allowed to drive it out the dealership
without having good comprehensive vehicle insurance. The dealership salesman would
recommend that you take top up cover or credit shortfall cover, to protect you
if there was ever an insurance claim. If you accepted without giving it much
thought; little did you know at the time, that this would be one of the best
decisions you would ever make. If you car was ever stolen you would discover
there was a hefty shortfall to pay, but the top up insurance cover could
potentially save you from a further financial loss.
Below are some lessons learnt from our experience when purchasing your
first vehicle insurance:
• Ensure your vehicle is insured on retail value basis – which is the
value you would expect to buy the vehicle from dealer floors.
• Ensure all optional extras added to your vehicle are noted
• When checking your affordability for a new vehicle, remember to factor in
insurance cost. Most first-time vehicle buyers forget to factor in fuel and
insurance cost on their budget when the plan to buy a new vehicle
4. Insurance protects you when life happens
When starting your career and
building or buying a home, “content and structure insurance is necessary
to cover you for things such as burst geysers, mechanical breakdown of
appliances like a fridge or a washing machine, giving you peace of mind.”
5. As you step up and step out of your home, protect your personal
As a caution, insuring assets and the concept of insurance, is not a
“get rich quick scheme”; the purpose of insurance is to put you back in the
same position as you were prior to a loss, relieving you of financial burdens.
It is critically important that as young professionals progress in their
career, to protect the goods that you acquire and step out of the home wearing
and on your person.
Name brand sneakers, spectacles, a fancy watch, an expensive smartphone… in
many cases is not far-fetched to assume that you step out of the house wearing
items which are indeed valuable. Ask yourself what will happen should either of
these items get damaged, lost or stolen?
Handbag insurance has been pivotal to protecting against loss.
(unspecified all risks)
If your insurer has handbag insurance, opt for this as it means you are covered
without needing to specify items like perfumes, make up, expensive pens,
etcetera. Should you lose or misplace your personal belongings, you should be
Another option is All Risk cover, however there is a limit to how much your
insurer will cover when it comes to your all risk cover, which covers those
items which you use away from your home or on your person, like laptops and
As you progress in your career, your personal brand will also evolve and
your taste for more expensive things in life will grow; it is important that
you match your insurance cover accordingly.
For assistance with your short term insurance CLICK HERE
Pictures by Pixabay
Article courtesy of Antonia Oakes, Retail Executive of customer
experience & responsible business at Old Mutual Insure
Featured in FANews.