The Sweet and the Sour of Short Term Insurance?
Short term insurance may look attractive to many, but is it really a good option?
Term insurance is similar to a life policy, except that it is only viable for a certain period. The length of the term is decided with the help of your insurer.
In South Africa a short-term insurance policy is a short term policy which relates to risks in fixed assets (i.e. buildings and equipment) located in South Africa. It also refers to any risk where the insured is a South African-resident or he or she has a registered office or principal place of business in the country. It can thus be concluded that short term insurance is a non-renewable, inexpensive source of coverage.
Short term insurance is also popular amongst people who are amidst a big lifestyle change (i.e. school leavers, people between jobs or tertiary graduates). For them short term insurance fills the gap between more traditional, long-term policies.
The main attraction of short term- policies is its low premiums. There is, however, a lot of down sides to this. In most instances a very high deductable accompanies a low premium. Furthermore, one has to keep in mind that a deductable is paid per claim. This means that the money you pay out of your pocket can really add up. It is thus important to remember that short term insurance is ideally only a temporary option.
Short term insurance queries are handled by the Short-Term Ombudsman. Being a voluntary Ombudsman, he usually tries to convince the insurer to admit a claim. The Ombudsman can also give a formal ruling and the insurer will then be bound to act accordingly. There is no right to appeal against the decision of the Ombudsman.