Find out what insurance products really do for you

Do not assume that all insurance products are a waste of money until you find out how they can help.

12:58 04 January 2014

If you have heard of financial protection products you might be wondering exactly what those entail. Basically, they are insurance. Many types of insurance are geared towards saving and protecting you from the risk of losing your funds.

Here are a few examples of these types of financial protection products and their benefits:

• Life insurance — helps cover certain types of costs incurred by a death. This type of coverage means your loved ones do not need to take money out of their regular income to try and cover the typical costs of burial, debt payoffs, estate management, etc.

 

• Mortgage insurance — allows you to rebuild a home if there is a disaster such as flood, fire, vandalism, or earthquake. Without this type of insurance, you might not be able to repair a home that has been devastated in such a manner and your initial investment would essentially be gone.

 

• Critical illness cover — this protects you from the financial devastation that long-term illnesses can have. Remember that as with most insurance products, different companies have slightly different coverage stipulations, requirements, and benefits.

 

• Income protection — this type of insurance helps those whose income suddenly becomes threatened when workers are made redundant, have an illness that prevents normal work, or other similar circumstances. This insurance allows you to make your normal payments to avoid issues.

Some products may have overlapping coverage:

• The life insurance and mortgage insurance from above, for example, overlap in coverage. Some mortgage protection will pay off the remaining owed balance of the home up on the death of the mortgage holder. This does not necessarily mean that you should neglect a traditional life insurance policy, but if you have options to customise your life insurance you might want to make sure that you aren’t paying twice for the same type of coverage.