Making better choices
is not always this easy


Insurance – Different Types Available and What They Cover

The purpose of insurance is to protect you from huge financial pressures as a result of some kind of loss. It could be loss of a loved one, your job, your physical abilities, your car, or your house. Either way, losing one or more of these things can incur tremendous costs.

Being unprepared for financial emergencies can really put you back several steps and jeopardize your chances of achieving financial security in the future. Personal financial planning helps you prepare for various obstacles, losses, and emergencies which could otherwise cripple you financially.

types of insurance in south africa

Different Types of Insurance

Insurance can be broken down into two main categories: short-term insurance and long-term insurance.

Short-term insurance can be described as insurance for your “stuff”. In other words, short-term insurance covers your assets such as jewellery, furniture, electronics, cars, valuable art, and your home.

Long-term insurance is insurance for you. This insurance aims to cover you financially if something bad happens to you such as disability, loss of income, and loss of life. Long-term insurance can also be used to protect your family members from any financial burdens which arise after your passing.

Examples of Short-Term Insurance
  • Home insurance – Covers damage caused by events such as fires, floods, lightning, and theft
  • Car insurance – Covers theft, as well as damage caused by accidents, fire, or minor fender benders
  • Travel insurance – Used only when travelling, travel insurance covers you in the event of an accident, medical emergencies, flight cancellations or delays, and lost or stolen luggage
  • Medical insurance – This insurance refers to medical aid (including hospital plans), and gap cover which cover you for planned and unplanned medical procedures, specialist consults, GP visits, chronic medication, scans, and blood tests
  • Business insurance – Insurance which covers businesses in the event of loss of damage. Includes building insurance, business legal cover, and professional liability cover
Examples of Long-Term Insurance
  • Life insurance – This is a policy that will pay out a lump sum to your family when you die, so that they can cover day-to-day expenses, settle your outstanding debt, or invest for their future
  • Disability cover – Disability insurance covers you financially should something happen which causes disability. This money can be used to cover medical expenses, supplement loss of income, cover day-to-day expenses, or invest
  • Income protection – If something happens that renders you unable to earn a stable income, income protection insurance covers you. Events that can cause loss of income include retrenchment, illness, and injury
  • Retirement – A retirement policy is a type of long-term insurance that helps you prepare financially for your retirement

Which Type of Insurance do You Need?

It can be tricky to figure out what type of insurance you need but our financial planners in Johannesburg can help you figure it out. In the meantime, there are some questions you can ask yourself if you feel you don’t really need insurance at all:

  • Could something unexpected happen to you, causing you to lose income?
  • Do you own a house?
  • Do you own valuables such as cameras, televisions, cellphones, computers, or sound equipment?
  • Do you own a vehicle?
  • Are you married or planning to get married?
  • Do you have people who are financially dependent on you?
  • Do you own your own business?
  • Are you a parent?
  • Do you own a pet?
  • Do you have a job?
  • Are you at risk of dying or getting a serious, life-threatening illness?

If you answered yes to any of these, it means you should be getting insurance.

Olemera – Financial Advisors in Johannesburg

Although the two main categories of insurance are short- and long-term, there are hundreds of different types of policies which fall under each category.

Our financial advisors understand that figuring out which type of insurance you need can be extremely overwhelming, but we are here to make it easy for you.

Contact us and let’s have a conversation about insurance, what type you need, and why its something that should be non-negotiable.

Lastly, keep an eye out for our next few articles where we will be discussing the topic of insurance in detail.

Comments are closed for this post, but if you have spotted an error or have additional info that you think should be in this post, feel free to contact us.


Get the latest updates in your email box automatically.