MONEY, HONEY!

Self-proclaimed ‘money dork’ Sam Beckbessinger, author of How to Manage your Money Like a F*cking Grownup, answers your questions about insurance.

Money guru Sam Beckbessinger answers your questions on insurance

With the current economic climate, times are tough and I’m struggling to make ends meet. I’ve removed all non-essentials, but it still isn’t working. Should I part ways with my insurance broker and look for a cheaper, more direct option?

A: Things really are tough out there. You are not alone.

The first thing to do is to get the data about where your money is really going. Sign up for an app like 22seven that tracks and categorises your spending automatically, and spend some time understanding where the leaks really are. You’ll likely find it’s not the fun stuff at all – it’s the big, boring stuff like how much your car costs, or your house. If 80% of your budget is going into your housing, transport and food, there’s not much point trying to chip away at that last 20%. It might be simpler to make one drastic decision, like becoming a one-car family, moving closer to work so you can sell your car, or downsizing your home.

But yes, direct insurance is a GREAT way to put a few hundred rands back in your pocket every month. There are a host of new players like Naked Insurance, IndieFin and Pineapple that let you insure directly from an app. Also, make sure that you’re not over-insuring. Insure against the stuff that can bankrupt you (like disability cover, and a hospital plan). For stuff like losing a cellphone, rather start building up an emergency savings account.

Q: My daughter is going to university. We wanted to treat her to a new car. How do I make sure she’s covered under my short-term insurance?

A: You’ll have to call them and check! This is another reason why I like the new breed of insurers, like Naked Insurance. They offer realtime chat on their website. Can we agree that sitting on hold to an insurance company call centre is the worst way to spend an afternoon?

Q: How often should I update my household insurance? Because my premiums increase each month, can I assume my cover is still adequate?

A: It’s worth checking your household insurance about once a year, usually because you can bring your premiums DOWN if you shop around. Get some competing quotes, then call the retentions department of your current insurer and tell them about them. They’ll normally reduce your premiums, or you can then just move to the new insurer. It’s a mission, but wouldn’t you rather spend the extra cash on a local holiday than on insurance?

Honestly, I am not a huge fan of household content insurance. It’s the kind of thing I would rather ‘self-insure’ by maintaining a healthy emergency savings account. Once you give the money to the insurance company, it’s gone. Savings are like a 110% Outbonus every year!