Business & Economy

Friday, 08 May 2009 13:24

Insurance industry takes strain as debt-ridden consumers cash in policies

{pp}Insurers are warning consumers of the pitfalls of cashing in insurance policies early or defaulting on payments as the debt-crisis sees more consumers default on insurance.

Andre Snyman, CEO of Consumer Assist, South Africa’s largest debt counselling organisation who has worked as an insurance broker says, “We are seeing more and more heavily indebted people take the risk of no insurance or cashing in policies early. We are counselling against it because they can lose everything they have if robbed and too, they lose future benefits and protections. Insurance should be seen as a form of protection.”

One of the things Consumer Assist debt counsellors do is recommend that consumers annually review insurance policies and adjust their premiums. “For example, a car bought today could drop 35% in value in its first year; the car owner should once a year adjust his or her insurance premiums down to the retail book value of the vehicle and move the money saved into boosting household insurance. “As another example, a third of the items stolen in any burglary are jewellery, at the moment platinum and gold prices are low, so the value of that jewellery is lower. However, there are occasions when it will be higher so annual assessments should be made and premiums adjusted. But too, other commonly stolen items such as electronics, computers, cellphones and the like are mostly imported and the decline in the value of the rand has made those items more expensive if you get robbed today – can you afford to replace those items?”

Pretoria insurance broker, BG Kleynhans of Consumer Assure brokers says, “Too often those insured pay a premium based on the initial purchase cost over many years even though the vehicle is declining in value – they’re essentially throwing money away. It is important that you adjust the insured value on your policy once or twice yearly. Too often the premium increases while the value of your car decreases.” Kleynhans recommends: “Contact your broker at least once a year to adjust the value or your vehicle downward and increase the contents of your house by at least 10%.” Snyman advises that consumers contact their insurance broker or insurance company and review their policy before they go on vacation. “And don’t let life insurance, endowment policies or anything else that will give you a financial cushion in the future lapse, discuss your problems with your broker or go for debt counselling if you are in financial crisis, there are ways to keep the policies intact.”

If you don’t have a broker Snyman recommends you get one, “he or she will annually review your policies and advise you or remind you of any necessary adjustments.”

Contact information:
0861 21 22 23
Debt counselling call centre

CEO - Consumer Assist
Andre Snyman
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Issued by:
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011 646 7637
Charlene Smith Communications (Pty)Ltd
Contact: Leila Beltramo
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Tel: 021 762 2656

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