Many people wonder what the difference is between short-term insurance and long-term insurance.
Some may think that it simply has to do with the amount of time that the insurance is valid for. Although there is some truth to this, there are some things that need to be clarified.
Short-term insurance refers to all types of insurance policies other than life insurance.
This type of insurance is classified as “short-term” because it’s likely that your insurance needs will change over time and, therefore, the policy will need to change too.
Most commonly, short-term insurance is only taken out for the period that it is needed, which may vary from a few months to a number of years.
The fundamental purpose of short-term insurance is to cover the financial risks related to your material possessions as well as those of your family.
Examples of short-term insurance include:
There are typically two types of home insurance that you can take out:
Insurance of the actual physical structure of your home or against damage caused by:
Insurance of the contents of your home against theft and damage. These items can include:
Insurance of your motor vehicle against fire, theft and damage. This typically includes minor bumps and scratches to hail damage and more serious accidents. The extent of your cover will depend on the type of insurance product you select.
However, there are typically three types of car insurance available:
Insurance of valuable belongings you carry around such as
When insurance companies talk about premiums, they are referring to the amount of money that you will pay each month for your insurance cover. Your premium is calculated according to your specific risk profile as an individual.
For example, when insuring your vehicle, the insurance company will take a look at the following factors before deciding how much premium you will pay:
The higher your risk profile, the higher your premium will be each month.
Short-term insurance doesn’t stop here. There are many additional extras that you can take out to ensure all your individual needs are covered.
These are optional extras as not every person who needs short-term insurance needs these additional covers:
Short-term insurance is as important as long-term or life insurance as it protects you against unexpected events such as theft, accidents and natural disasters.
Replacing your belongings can be extremely expensive if you do not have insurance for them. Therefore, paying a monthly premium and a small excess for insurance claims instead, is a smart financial move.
Choosing a policy or the right cover for you may be difficult as there are countless insurance products to choose from. However, our financial advisors can provide you with expert advice while finding the perfect short-term insurance for you.
For more information about our financial services, or for advice on choosing the right insurance product, please feel free to contact us.
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