By: Siyakha Masiye at MiWay Insurance

As we approach World Savings Day on 31 October, it's an opportune time to reflect on the pillars of financial security. While saving is a fundamental aspect of financial planning, short-term insurance often stands as the unsung hero that underpins true financial stability. By exploring the critical role that insurance plays, we can better appreciate its importance as a strategic and prudent decision.

The sooner, the better

Securing insurance early in life is not merely a precautionary measure; it is a strategic move that can yield long-term benefits. “It’s an important foundational financial habit to ensure your budget extends to having the insurance you need,” says Siyakha Masiye at MiWay Insurance.

“Insurance is important at any age, however, as we grow older and gain more financial power, we are likely to have more to lose in the event of the unexpected. This could include upgrading to a more expensive vehicle or purchasing a home. It also extends to opening a business. The greater the value of assets, the more important it is to have proper insurance protection in place.”

A shield against unforeseen circumstances

Insurance acts as a protective shield, a financial safety net that can catch us in times of unforeseen circumstances. “If your car is broken into or you get into an accident, or if your personal goods are stolen, insurance can greatly assist with keeping your budget in check while providing funds to replace your lost or damaged assets,” Masiye adds.

Imagine a young family that has recently purchased their first home. The bond on the property is a significant financial commitment that spans decades. Buildings insurance protects the structure of the property, while contents cover ensures that insured items inside the home is safe against unforeseen issues such as a flood, fire or burglary. This is crucial as without insurance, replacing the property or any of the items inside would be beyond expensive to do. Using savings to cover these types of costs would derail financial plans.

In another scenario, consider an entrepreneur who has invested heavily in their business. “Business insurance, including liability and property insurance, can protect against unforeseen events such as natural disasters or lawsuits that could otherwise jeopardise the business's survival. Without such coverage, all personal savings and investments could be at risk,” Masiye says.

“The realm of insurance is vast, offering various policies tailored to different needs. Car, home, All risk, known as MiMovables (for items you carry with you) and business insurance are among the most common types of short-term cover, each serving a unique purpose, while contributing to overall financial safety.”

Building financial resilience

Insurance does more than protect against losses; it builds financial resilience. It transfers the risk of significant financial loss to an insurance provider, individuals and families can focus on growing their savings and investments with greater confidence.

“They can pursue their financial goals knowing they have a safety net in place, which is crucial for long-term financial planning and stability. It’s impossible to predict the future but to push ahead without having insurance as part of your financial plan is a risky strategy. The premiums are small compared to the payouts when it matters,” adds Masiye.

Saving (and insuring) for a rainy day

As World Savings Day reminds us of the importance of financial prudence, let us not overlook the indispensable role of insurance in this equation.

“While one may not need to claim, the risk of not having cover in place to protect your assets, and wallet, can cost you so much more if worst case scenario were to arise. Insurance is the foundation upon which financial security is built, offering protection, peace of mind, and the freedom to pursue aspirations with confidence. By working with your insurer and understanding the diverse applications of insurance, you can ensure you are not only saving for the future but also safeguarding it,” Masiye concludes.