Are you engaging in risky business?

So, you have car insurance, a medical aid and a life policy and you think you have the bases covered. The premiums come off your account each month and you don’t give it a second thought.

Unfortunately, most people who are underinsured or end up with shortfalls only find that out when their claims are refused. Take this quiz to test whether you are well and truly covered for a mishap or are taking avoidable risks.

1.

A. You are aware your ability to produce an income is your best asset so you have good disability cover.

B. You think disability cover is costly but you do have six months’ salary saved up in case of an emergency.

C. You don’t have any emergency funds saved, but you can always access your bond if you need quick cash.

D. You make sure you keep good relationships with friends and family members because you will need to borrow from them in case of an emergency.

2.

A. You have a life insurance policy and you know that if you die all your debts are paid and your family will have enough money.

B. You have life cover but you are not sure if it’s enough and who the beneficiaries are.

C. You think your life policy is a good “investment” and it will give you a good income in your old age.

D. You don’t believe in life insurance.

3.

A. You have a fully comprehensive medical aid with a reputable company.

B. You have a hospital plan.

C. You have a very basic medical aid - you went for the company with the cheapest premiums.

D. You are fit and healthy, you’ll think about getting a medical aid when you hit 40.

4.

A. You are meticulous about the maintenance on your car and check your tyres every time you go for a drive.

B. You keep the car in reasonable condition, but it could do with some work.

C. You miss servicing dates and you are sure you can squeeze another 5 000km out of your tyres.

D. The car is old anyway, you are going to drive it into the ground, you know the tyres are looking tired.

5.

A. Every time you move, you inform your insurance company about your new residence.

B. You downgrade your insurance coverage as your car ages each year.

C. You sold your car to someone else but will keep it insured under your name until they pay it off.

D. You think car insurance is a rip-off so you go for the cheapest policy.

6.

A. You are in possession of a valid driver’s licence.

B. You have a licence but it has expired.

C. You only have your learner’s licence

D. You have not got around to getting a licence, you are a good driver anyway.

7.

A. You upgrade your homeowner’s policy every year.

B. You only upgrade your homeowner’s insurance when you buy a new asset.

C. You bought homeowner’s insurance when you bought the house but have not upgraded since.

D. You don’t believe in home insurance. The chances of a robbery or fire are slim anyway.

If you chose mostly As

You are responsible about your insurance and you have substantially reduced the risk of loss by following all the requirements of the insurance companies. Often people think that merely paying the premiums is enough to qualify for coverage. However there is also a responsibility on the part of the insured to adhere to the conditions of the coverage. You’re one of the folk who understands that – congratulations on your risk-minimising approach.

If you chose mostly Bs

You have coverage but you run the risk of getting a claim refused. For example, if your car is not properly maintained and you have an accident, the assessor may say that negligence caused the crash. When it comes to homeowners’ policies, many people neglect to re-evaluate their assets each year and end up under-insured. This will affect the amount the insurance company will pay out.

If you chose mostly Cs

You are probably wasting the money you are spending on your insurance because you are not taking it seriously enough to fulfil the obligations required by the insurers. For example, if you have an expired driver’s licence, the insurance company could refuse to pay your claim. In addition, if you are injured, your medical aid may refuse to pay because you were driving illegally. You tend to take too many risks and they will come back to bite you.

If you chose mostly Ds

You are playing roulette, and the odds are against you. Not having coverage for life’s risks can devastate a financial plan. Just one car accident can cost R200 000 excluding the damage to your car and time off work. Often people decide to wait until they are older to get a medical aid but they don’t realise their premiums are loaded the older they get. For example, someone who joins a medical aid at 40 may pay 20% more per month than someone who joined at 30. The longer you wait, the bigger the loading.

Tips to ensure your claims are paid

1. If you have debt and dependants a life policy is essential, but make sure you update the policy as circumstances change. A life policy may have an investment portion attached but it is rarely enough to see you through retirement. Do not rely on it as your only source of savings.

2. Do not go for the cheapest policy - it will have the most exclusions. You get what you pay for so read the fine print.

3. Always inform an insurer if you move or sell the car. A new location or owner may change the premiums on the policy depending on the risk factors.

4. Keep your car well maintained.

5. Upgrade your homeowner’s policy every year, especially if you renovate or acquire large assets. Never under-report the value of your home or contents to keep the premium low - you will be penalised by the insurer in the event of the claim.