The importance of insurance

By Laurence Hillman, MD of 1Lifedirect

1LifedirectNo matter how old you are, insurance is an absolute necessity.  Planning ahead, means you do not have to spend a small fortune when an unfortunate event happens or pass the debt on to your parents. In fact, putting off insurance is detrimental as sometimes the later you buy insurance, the more expensive the premiums become.

Let’s look at some examples:

Laurence Hillman,
MD of 1Lifedirect

Lucy*, an 18-year old matriculant, finally gets her wheels as a going away present from her parents before she heads to university. Finally freedom! No more getting dropped off a block away from the venue so that people won’t see mommy dropping her off. Embarrassing! So now she is the cool kid, picking up friends, and going where she pleases. Until one night she drives a little too fast and breaks a little too late hitting the car in front of her.

Without insurance: You’re in big trouble now Lucy. How will you afford to pay for the damages you just caused to the BMW in front of you, not to mention your own car? What if you were badly injured or if you injured the driver in the other vehicle? Can you afford those costly medical expenses?

With insurance: The claim will be attended to by your insurance provider, irrespective whether it was your fault or the other driver’s. Usually, the only money you may have to pay will be your excess. Injured? Your medical aid will pay for your hospitalisation, usually at a private hospital.

Michael* is a 21-year old student, who walks to and from the bus station to varsity. He recently splurged on a Tablet PC for homework and a MP3 player to listen to while commuting or during boring lectures. He tirelessly saved for these gadgets each month, exercising self control not to overspend on other things. Finally, he had enough money to purchase the gadgets. One day, on his way to the bus stop, he was approached by thugs who demanded that he hand over the gadgets. Fearing the or worst, he complies.

Without insurance: All that hard-earned money saved to buy those gadgets means nothing. He now needs to start saving from scratch.

With insurance: Head straight to the police station to an alert them to the crime. They will give him an affidavit which he will hand over to the insurance company who will deal with the claim. A replacement item will be in his hands as soon as the claim is approved.

Now imagine that even though Michael had complied with the thugs, he still got shot, suffered severe blood loss and died on the scene.

Without insurance: During their time of grief, Michael’s family will have to struggle to put together some finances to pay for a funeral, while also dealing with the actual logistics of it. After this traumatic event, they may be liable for an outstanding debt Michael may have incurred. There is an old saying that goes “The only certainties in life are death and taxes”. This unfortunately is quite true. The problem is that Michael was still young and did not think that he would die so soon. Unfortunately, there is no way to cheat death.

With insurance: With life insurance, your loved ones will have the financial stability that they need when you are no longer there to support them. You will be able to alleviate the burden of any outstanding debt (like student loans) you may have, so that your loved ones do not have to worry about this. Funeral benefits will provide them with some immediate financial relief, and can be used to cover those unexpected expenses including but not limited to funeral costs.

Remember there are some expenses that should never be excluded from our lives. These expenses should rather be viewed as investments as they provide for your future while giving you the peace of mind to know that you are secure, should anything happen