Does your insurance still cover you?

PSG

Because insurance policies are renewed annually, many people forget about them after they’re initially set up. This can be a costly mistake.

Research has shown that around 40% of consumers are under-insured.

A good insurance advisor will initiate a review process with you annually. This includes an overview of the insurer’s revised terms and conditions and the option to seek alternative quotations. However, checking any adjustments to your policies remains a policyholder’s responsibility.

Four questions to consider:

Has your life stage changed?

Have any of your life circumstances changed? Marriage, divorce, having a baby or buying a new home can all affect your insurance coverage requirement, and may mean that you need to adjust your policies. Keep your insurer informed of any changes.

Is your car insurance up to date?

Your insurer will adjust your car’s value every year since it’s a depreciating asset (unless it’s a vintage or collectable).

This means the sum insured will decrease, unless you have an agreed value policy (based on the initial purchase price, not the depreciated value). Check your policy requirements carefully every year. Don’t forget the interest payable to a finance house and after-market vehicle extras.

Have you added new valuables to your household contents cover?

The replacement value of your household contents is likely to change every year. Some items, such as electronics, may have decreased in value, whereas others, such as art or furniture, may have increased. Think about the cost of replacing these items, not their original cost.

New items need to be added to your policy.

Is your homeowners’ insurance adequate?

Your house should be insured at the full value it would cost to replace it. This is calculated based on current building costs (including professional fees), which increase every year. If you’ve done any renovations that have increased the value of your home, notify your insurer. Mortgage bond insurance is not necessarily sufficient as it simply increases with inflation, whereas building costs increase at a rate exceeding that.

Resist cutting costs

As a grudge purchase, insurance policies are often the first to be pushed aside to reduce monthly expenses. This is a big gamble.

This was first published on www.psg.co.za

Moneyweb

When talking about shares, the aspect that tends to get the most attention is price growth. Discussions around the braai are about how the Naspers share price more than doubled between the start of 2015 and the end of 2017.

In general, investors underestimate just how significant dividends can be. As Paul Stewart at Bridge Fund Managers points out, over long periods, earning and reinvesting dividends produces a growing portion of a portfolio’s total return.

“For example, if you deconstruct the performance of the Old Mutual Investors Fund, which has the longest track record of any equity fund in the South African market, 60% of its long-term total return comes from dividends and growth of dividends over time.

The longer you invest for, the more important the dividend