Most of us think of insurance as a non essential or as a thorn in the side of our budget. We have other commitments and debts to pay and of course a lifestyle to support. Loads of people don’t like paying monthly premiums as these funds could rather be used to further enhance our lifestyles.

However insurance is and will always be extremely important to your financial well-being. this is due to the fact that covers you from unexpected, sometimes extremely heavy, costs that could be incurred at the time of a claim.

At least once a week I will have a debate with either a friend, client or colleague. With more or less the same idea “But if I save the premiums for a year I can pay my own claims” In a perfect world this might work, But the flip side of the coin has other plans.

Firstly, Saving is hard. Humans by nature have a tendency to spend, it will either be to cover another debt or to buy extra food. The favourite of course is our own guilty pleasures, by buying luxuries, a extra or new TV, the food steamer we saw and bought but never use. It is very seldom that we would actually save the money.

Secondly, even if you are able to save the money, it takes one incident to clear out the savings and still leave you with a short fall. The easiest way to determine if you can save enough would be to ask the following question.

If the average vehicle value is R250 000.00 how long would I have to save to pay for another persons damages. What is my cars value and how much would I need to save up to replace my car. Lastly what happens if there is a liability claim for R1 million. what do I do then.

Insurance is essential unless you have a bank balance of more than a million and dont mind loosing it at any given time.