Insuring your future – essential insurance insights for young adults

Johannesburg  - What do Vusi Nova, Bonang Matheba, Lerato Kganyago, Lindsay Lohan, Kim Kardashian, Paris Hilton, Orlando Bloom, and Rihanna have in common, besides their fame and influence on today's youth? They have all had jewellery, electronics, or other personal items stolen from them. 

"Young people today walk out the door with expensive and designer handbags, shoes, cell phones, tablets and jewellery, without realising the financial consequences if something goes wrong," says Molebatsi Langa, head of retail strategic accounts at Old Mutual Insure.

She emphasises that without adequate insurance coverage, a theft incident – or any other loss – could leave young individuals significantly out of pocket.

In the spirit of Youth Month, honoured in June every year, South Africa celebrates the remarkable contributions of its young generation towards national progress. Yet, amid today's challenging economic landscape, the youth face distinct risks that can leave lasting financial repercussions. Against this background, below Langa shares her essential insurance insights for young adults this Youth Month. These include:

1. Insurance must-haves: These days we carry around items that are often more valuable than many of those we have at home. Thus, all-risk cover, which provides insurance for valuables like cell phones, earbuds and "pods", cameras, and laptops, regardless of location, is a must have. We cover these under the electronic equipment in our policy wording, as it's not always under all-risk cover. It is commonly referred to as worldwide coverage; if it is noted on your policy it is covered. If you are lucky enough to drive a car, whether your parents bought it for you or you did, car insurance is a must. Similarly, household insurance to cover all your other possessions is a must.
2. Honesty is the best policy: Always answer insurers' questions truthfully because otherwise you'll run the risk of having your claim rejected or policy cancelled. Remember that the policy is assessed based on your risk profile, which is determined by the answers you provide to your insurer when setting up the policy. Insurers conduct detailed investigations when validating a claim and if any misrepresentations are revealed during the process, the claim may be rejected. If a claim is rejected because you did not tell the truth, it may also make it difficult to obtain coverage from other insurance companies.

Don't opt for the cheapest premium if you can't afford a higher excess: A mistake that is easy to make, especially when you are still accumulating wealth, is to opt for a lower monthly premium for a policy, not realising that you will have to pay a substantial excess in the event of putting in a claim.

"I wish I had a better understanding of my excess so that I could have saved enough for unforeseen circumstances. When I got my first car, fresh out of my learnership, I reversed into a trailer while leaving the office parking lot. When I contacted my insurer, I was shocked to realise that my decision to opt for a lower monthly premium meant a higher excess. I had no idea how I was going to afford it. I cried a lot; it was a tough lesson," shares Langa.

Remember, choosing a higher excess will result in a lower monthly premium, while a lower excess will lead to a higher monthly premium. It may be tempting to go for the higher excess to save on your monthly payments, but when faced with a sudden R10,000 excess for car repairs, you might find yourself in a difficult situation. Therefore, it is critical to carefully consider your options.

1. Read the policy documents: Growing up means being more responsible and taking ownership of our own journey. If you are taking out your own insurance contract, you need to understand that it comes with responsibility. An insurance contract means there are two parties who have a responsibility. The insurer has the responsibility of handling your legitimate claim and putting you back into the same position that you were before the loss. Your responsibility, as the policyholder, is to understand the terms and conditions of your insurance policy. If you are not sure, ask your broker or insurer to explain it to you so that you know exactly what you are signing up for. "Many insurers have gone to great lengths to ensure that policy documents are easy to understand and without jargon," says Langa.
2. A common misconception: People think insurance is a one-size-fits-all cover. Insurance premiums vary based on risk factors, such as vehicle type, colour, and driver's profile. Your risk profile as an individual is also considered. It may be worth considering how much more you could pay for car insurance based on the colour of the car you are thinking of buying.
3. Choose products and insurers that suit your lifestyle: Many young adults or "Gen Zs" believe that acquiring insurance or putting in a claim is a tedious, time-consuming process filled with endless paperwork. However, in today's world, numerous insurers have developed platforms that streamline the sign-up and claims procedures. You no longer have to make phone calls to a call centre to set up a policy or put in a claim; it can be as simple as sending a WhatsApp message, downloading an app or submitting an image of your loss.