Risk and Savings in my Life

RISK AND
SAVINGS
IN MY LIFE
A Community Workbook
RISK AND SAVINGS IN MY LIFE

Risk and Savings in My Life: A Community Workbook
© South African Insurance Association 2011
Developed by Bright Media for the South African Insurance Association
ISBN: 978-0-9814322-8-1
CONTENTS
In this book, you will find:
• My Risk and My Savings Plan
1
1. MY SAVINGS
1.1 Types of Savings
1.2 Mzansi Savings Accounts and your Dreams
3
3
4
2. MY RISK: INSURANCE
2.1. Homeowners Insurance
2.2. Household Contents Insurance
2.3. Motor Insurance
2.4. Consumer Credit Insurance
2.5. Personal Liability Insurance
2.6. All Risks Insurance
2.7 Personal Accident Insurance
6
9
10
11
12
13
13
14
SAIA
Community Consumer Education Project

My Risk and My Savings plan
This Risk and Savings Workbook will provide you with the information you need to
plan and make good decisions about your personal risk and savings needs.
You are unique (one and only you!) You are in charge of your savings. You are in
charge of minimising your risks. You are different from everyone else and you have
your own needs when looking at your risk management and savings.
This workbook is going to help you do all these things. Why? You never know what is
going to happen to you or your family. That is why you need to be prepared for the
future.
You are always at risk.
This picture....
....Can become this....
And by managing your
risks, you CAN get back to
this...
RDP Housing Photo: Hannelie Coetzee, MediaClubSouthAfrica.com
How? By saving and insuring the things you own. You don’t need to be rich to be able
to afford insurance. Actually if you cannot afford to replace the things that you own,
this is when you need insurance! Seriously!
So, this workbook is all about becoming a risk manager and taking control of your
money, so that you will Cover your risks and Plan for your future by Saving.
RISK AND SAVINGS IN MY LIFE
1

How do I plan?
Look at your own needs; what you can afford to save, and what you can’t afford to
lose. Now, are you ready to take ACTION?
ACTIVITY 1. Let’s test our knowledge. Please fill in the first two columns now
(today’s date). When you have finished the workbook and the seminar (later), you will
come back and answer the questions again:
Today’s Date:
Later:
Questions Yes No Yes No
I can get Homeowners Insurance if I live in a RDP house or in a
township?
Household Contents Insurance covers all the things that are
inside my house?
If I buy on credit I need to check my monthly payments to see if
that includes Consumer Credit Insurance?
Do you believe you need to get insurance on things you own?
Do you believe you have to save money in a savings account?
Is it right to say that long term insurance covers life events such
as death, retirement and disability?
Do you know what “managing your risk” means?
ACTIVITY 2. Look at this checklist of Risk Management and Savings options.
Do you already have one of these financial products? Do you think you will need any of
these in the future? ...Keep this workbook in a safe place to remind you of your plans.
Mark the column with ✓or ✗ to help you with your planning.
Risk Management & Savings
Options
Already
have
Do need
urgently
Will need in
the future
Need to find
out more
Personal Insurance
Household Contents Insurance
Consumer Credit Insurance
Motor Insurance
Homeowners Insurance
Funeral policy / Burial Society
Disability Insurance
Life Insurance
Retirement Annuity
Stokvel / Society Savings
Savings Account
Education Policy
Other:
2 RISK AND SAVINGS IN MY LIFE

1
MY Savings
Why should we save?
Because saving money can change your life! It really works! If you save you can
prepare for your future, afford those things you really want plus it is really empowering
to save money. There are loads of different ways to save money and because you are
unique you need to pick the option that will work best for you.
1.1
ACTIVITY 3. Types of Savings
Savings
method
Cash
Burial
Society
Stokvel
Description of savings method
Money saved is kept in a safe place, e.g. at home.
A group of people save a set amount each month for
group members’ family burial costs.
A group of people save money together each month.
They decide which member will receive the money
each month.
A group of people jointly open a bank savings account.
Money is withdrawn as the group needs it. All the
money, including the interest earned, is shared equally.
A person deposits their money in a banking account as
it is earned or on a monthly basis.
It is possible to deposit additional money into a home
loan account and use the account as a way of saving.
Valuable items such as gold chains, old coins, artwork
and collector’s items are bought and kept as an
‘investment’
✓I do
this
now
✓I plan
to do
this
Savings
Clubs
Bank
Home
Loan
Valuables
If you have been a super smart person and you already have savings maybe it is
time for you to invest those savings. Investing just means that you can put the money
somewhere where it will make you some more money.
But remember don’t put your money in a little tin under your mattress, this is the worst
thing you can do. What will happen if your house burns down and you lose all your
money? Think—and put your money in a safe place so that you know you can find it
again, like a bank. You have worked hard for it.
RISK AND SAVINGS IN MY LIFE
3

1.2
Mzansi Savings Accounts
AND your dreams
Have I convinced you to save money?
I hope so! And an easy way to start is to open a Mzansi Savings Account. Remember
it is much safer than sleeping on your money. What if your house burns down? What if
you get robbed? At least if it is in the bank you know it is kept safe for you!
The Mzansi Account
• This account is designed to meet the savings
and transactional needs of entry level banking
clients, especially people who have never had
a bank account before.
• This type of account is available from most commercial banks in South Africa,
for everyone over the age of 16 who has never had a bank account before.
• All you need to open a Mzansi Account is a green South African ID and a
minimum deposit as specified by the bank you choose (these deposits are low).
• With a Mzansi Account, you have the following benefits:
o You get a debit card
o Pay for items at shops where you see the logo displayed
o Withdraw and deposit cash at any ATM nationwide
o You get one free cash deposit every month
o You only pay higher transactional fees if you make more than 5 deposits
and 5 withdrawals each month
o There are no monthly administration fees
o Debit and Stop Orders are allowed for this account
o There is usually no minimum balance required. (Each bank has different
requirements so its important to check with your particular bank).
4 RISK AND SAVINGS IN MY LIFE

ACTIVITY 4.
What are your dreams? What do you want to save up for?
My Dreams
RISK AND SAVINGS IN MY LIFE
5

2
MY RISK: INSURANCE
There are a lot of different types of insurance and if you look at the picture below it
gives you an overview of some of the insurance options available.
household
contents
insurance
home
owners
insurance
consumer
credit
insurance
motor
insurance
Because you are unique, you need to look
at the column below and tick what you own. Next to
that are the relevant insurance policies that you need
to investigate.
personal
insurance
all risks
ACTIVITY 5. Understanding Insurance Types
Item
House
Furniture
Items bought on credit
Car
Job
Family
✓
I have a...
The Insurance I need to investigate is...
Homeowners Insurance
Household Contents Insurance
Consumer Credit Insurance
Motor Insurance
Disability Insurance, Retirement Annuity
Funeral Policy, life Insurance
Let’s learn more……….. Knowledge is power.
6 RISK AND SAVINGS IN MY LIFE

What do you know about Insurance?
To manage your risks, you need to know about insurance, right? Right! These are the
most important things you need to know about insurance:
Long Term Insurance
Definition: Long term insurance covers
life events such as death, retirement and
disability.
Types of Long Term Insurance
• Life Insurance
• Funeral Insurance
• Retirement Annuity
• Consumer Credit Insurance (For Life
Cover, Disability Cover, etc)
Did You
Know?
Zimele Insurance Standards
South Africa’s Life Insurance companies
offer life insurance products specially
suited to lower-income earners. These lowcost
life insurance products must meet what
are referred to in the industry as Zimele
standards. ‘Zimele’ means to ‘stand on your
own two feet’, and products meeting these
standards aim to be fair, easy to understand
and simple to have. Life insurance products
sold with the Zimele stamp of approval must
comply with the following standards:
• Policy summaries must be available in any
of the 11 official languages.
• Lower-income earners must be able to
buy a policy, pay the premium, or make
changes to the policy at least once a
month within 40km of where they live or
work.
• Low-income earners must be able to lodge
a claim and receive payment of the claim
at least every second working day within
80km of where they live or work.
• A share-call line must be available six
days a week.
Short Term Insurance
Definition: Short term insurance insures
your possessions (e.g. household items
and car) against things that might
happen, such as fire, theft or damage.
Types of Short Term Insurance
• Household Contents Insurance
• Motor Insurance
• Homeowners Insurance
• Personal Insurance
• Consumer Credit Insurance (to replace
or repair items lost or damaged)
Mzansi Insurance Standards
Some short term insurance companies in
South Africa now offer insurance products
specifically suited to households with a
lower income—these basic, affordable and
easy to understand products must meet what
are referred to in the industry as Mzansi
standards. Policies meeting the Mzansi
standards aim to provide cover for the home
(dwelling), household goods and personal
effects against sudden and unexpected events
such as fire, lightning, explosions, flooding
and theft.
RISK AND SAVINGS IN MY LIFE
7

More things you need to know
1. Promise = Trust
When you take out insurance, you are entering into an agreement of mutual trust.
This is very important. You, the client, trust that the insurance company will cover
what they say they would cover and with their promise, and the insurance company
trust that everything you told them about yourself and your possessions is true.
2. You can choose between Broker Insurance and Direct
Insurance
Just make sure that the broker or company is licensed under the Financial Advisory
and Intermediary Services (FAIS) Act. This is very important because you don’t want
to pay your hard earned money over to a fraud! Make sure that you are given a
license number.
3. There are three documents involved with your policy
a) The Proposal/Application Form:
o This form could be completed by filling in the actual forms, or online, or
by e-mail, or by giving all the information about yourself to a call centre.
o NB – When giving information on this form make sure that it is true
and correct as that is what they will have on their records (well, until
you make any changes that is).
b) The Policy:
o This document has all the legal information which applies to everyone.
c) The Schedule:
This document is specific to you and it should tell you:
o What the costs are, including what your broker earns on that policy.
o How your contract differs from a standard one. It must state all
‘exclusions’, ‘endorsements’ and ‘warranties’. (See point 4 below for
explanations of these terms.)
4. You need to understand the following terms
o Exclusions: Things you do not want covered.
o Endorsements: Things that must be covered.
o Warranties: This must be in place for the insurance to be valid (legal).
o Excess: This is the ‘first amount payable’ by you when you put in a claim.
Remember, the larger the excess, the lower your premiums.
Example of how these terms would be used: Let’s say you are insuring
your car. You have a brass emblem of your favourite soccer team’s logo mounted
on your bonnet. You have a cheap car radio that came with the car and you have
an alarm system installed. So you decide to ‘exclude’ the car radio because it isn’t
worth much anyway; you ‘endorse’ the brass soccer logo because you live for
soccer; and you ‘warrant’ that the alarm system will be used. Now, if someone
breaks into your car and steals the car radio, it is not covered. If someone breaks
off the soccer brass logo, no problem, you will be paid out. If your car is stolen and
it is discovered that your alarm system was not in working order, you have not lived
up to your warranty and you will not be paid out. Quite simple actually!
8 RISK AND SAVINGS IN MY LIFE

2.1
Homeowners insurance
home
owners
insurance
Yipee you finally got
your RDP house or you
have worked your whole
life to build your house
from nothing.
So why do you not have insurance on your house? Imagine something happens to
your house and you have nothing. Don’t risk that. Rather read this!
You can afford Homeowners Insurance. Some Mzansi-type insurance policies could be
as little as R20 –R50 per month. This depends on the company.
Why do you need Homeowners Insurance? Well because it covers the bricks, mortar,
roof and fittings in your house. All the things that will stay put if you turn your house
upside down. So in case the paraffin stove burns down the whole house you will be
able to claim from your Homeowners Insurance policy and be able to rebuild your
home.
Again it is up to you to phone an insurance company and insure your property for
the right value. It is also your responsibility to ensure that your house is in a good
condition and not falling apart. If you don’t look after and love your house with the
necessary maintenance then your insurance company might not pay out your claim if
say the roof collapses.
But if you look after your house and ensure that it is insured at the correct amount the
insurance will gladly pay for damages to your property.
RISK AND SAVINGS IN MY LIFE
9

household
contents
insurance
2.2
Household contentS
insurance
If you turn your house upside down, there will be a lot of things that will fall out. Now all
these things that fall out will be covered by Household Contents Insurance. This means
that if you have a burglary and your television, clothes and couches get stolen, you
can claim from your Household Contents Insurance policy. Some Mzansi-type insurance
policies may be as little as R20–R50 per month. This depends on what you insure.
Now be smart, walk through your house and make a list of all the items in your house
(only the ones that will fall out if you turn your house upside down). This list is called
an inventory and you can use this list to make sure that you have the correct amount of
insurance and you are not over-insured or under-insured. Don’t make that mistake, it is
costly.
Then the insurance company needs to know that you are also from your side doing
everything you can to protect your belongings. So insure that you have burglar bars,
security gates and if you can afford an alarm system that is even better. Keep the
security features in good condition else you might have a problem if you want to
claim. If you keep things honest and in good working order from your side then the
insurance company will pay out your claim.
Important things to remember about Household Contents
Insurance:
• Know what your insurance company covers! Read your policy and make sure you
ask questions if you don’t understand something.
• Check that your security systems, as you specified in your insurance policy, are in
working order.
• Make changes to your policy as your needs change, for example you bought
another TV—so you need to add that to your policy.
10 RISK AND SAVINGS IN MY LIFE

2.3
Motor insurance
Okay, so you have just
been able to afford to buy
yourself a small second
hand car. Do you think
it is not worth getting
insurance just because
it is old and second
hand?
Don’t think that!
If you cannot afford
to replace the car when it gets stolen
you need to learn more about Motor
Insurance.
motor
insurance
First you can get the whole deal, a Motor Insurance
Policy that will cover everything:
Collision: When you have an accident;
Fire: if your car burns down;
Theft: If your car is stolen.
But if you cannot afford the whole shiny Motor
Insurance Policy there is also Motor Insurance
called 3rd Party Fire and Theft. This option is
usually cheaper, it can be under R100 depending
on your car and policy, and it will cover the
following:
3rd party damage: So if you drive into a Golf
GTi with your little second hand car, the damage
to the Golf GTi will be covered by your insurance
company but not the damage to your car. But phew!
Luckily you don’t have to pay to fix the Golf GTi;
Fire: If fire destroys your car the insurance will replace your car;
Theft: if your car gets stolen, you will be paid out to replace your car.
What will the insurance
company ask for when you
apply for Motor Insurance:
• Where does the vehicle
live? The more security
there is, the lower the
premium.
• Who normally drives it?
Give the drivers age and
gender.
• Is the vehicle used for
business or for private use?
If business, what type of
business.
• Does it have theft
protection. They would ask
you what type of protection
example a gear lock,
immobiliser, alarm system
etc.
And if you really can’t afford any of the above have a look at only getting 3rd Party
Motor Insurance then at least you know you will not be paying to fix the damages to
somebody else’s car for the rest of your life!
RISK AND SAVINGS IN MY LIFE
11

2.4
Consumer credit insurance
Now this is
one you need
to know about.
Because all of us
sometimes buy
things on credit.
Consumer Credit
Insurance is insurance you are required to buy when you buy things on credit. This
insurance will settle the outstanding amount owed by you to the credit provider. In
addition, it can also include replacing or repairing an item. You may not even know
that you have this insurance because this insurance premium is often included in your
monthly instalment for the goods that you bought on credit. It is your responsibility to
find out if the place you are buying the goods from includes this cover in the amount
you need to pay back every month. This is important to know. Why? Because if
something happens to you or the items you bought it might be covered by Consumer
Credit Insurance and you might be able to claim from this insurance and then you will
be debt free. Seriously!
Be wise when claiming
When something happens to you and you need to make a claim on the Consumer
Credit Insurance, you will need the following:
• Identity document AND
• For loss or damage of goods:
o You must report the theft to the police and they will give
you a case number, hold on to this case number.
o Affidavit
• For Death:
12 RISK AND SAVINGS IN MY LIFE
o Death certificate
o Bank Statement—for additional beneficiary
payment (if this applies)
consumer
credit
insurance
When can you claim:
1. Loss or damage of
goods purchases
on credit
2. Death
3. Disability
4. Retrenchment
• For Retrenchment:
o UIF document or card
o Retrenchment documentation from your former employer
o A copy of your employment contract for contract workers
o If you are self-employed, you also need a copy of your business registration papers.

2.5
Personal liability
insurance
What?
This covers damage or injury to persons
or property of non-members of your
household.
For example: Your dog bites the aerial
installation man when he enters the
property to install it. A friend comes
to visit you and slips on the floor and
injures his back.
WISE TIP
It would be wise to have some Personal
Liability included in the Household
Contents of your Homeowners
Insurance or with your Motor
Insurance. Check whether these are
included before buying more Personal
Liability Cover—it is very inexpensive,
around R10 per month.
2.6
All riskS insurance
This applies to things you
move around with you for
example your handbag,
cellphone, bicycle,
sunglasses etc.
ANYWHERE!
Your loss is covered
anywhere!
SPECIFY!
You must specify
exactly what you want
covered!
personal
insurance
all risks
RISK AND SAVINGS IN MY LIFE
13

2.7
Personal accident
Now this is all about you. What will happen if you are in a taxi accident and disabled
for life and you cannot work? Personal Accident covers you against disablement
(caused by an accident) and provides for your loved ones in the
event of your death.
PERSONAL
ACCIDENT
14 RISK AND SAVINGS IN MY LIFE

Remember!
1 You are unique and need to find solutions that will suit
your needs.
2 If you don’t understand ask questions.
3 If you can afford it, get insurance to suit your needs and
minimise your risks.
4 Only buy insurance from a registered service provider.
5 Be smart—save money!
Useful Contact Numbers
• Always ask questions. Make sure you understand what financial products you have
selected. You must update your information and can change your product as your
life changes. Contact your insurer FIRST.
• If you are not satisfied with your insurance company’s decision, contact the
Ombudsman for Short-term Insurance (OSTI): phone on (011) 726 8900, email to:
info@osti.co.za, or write to: PO Box 32334, Braamfontein, 2017
• If you have any complaints after you have dealt with an insurance company,
contact FAIS Ombud: (012) 470 9080, info@faisombud.co.za.
• If you are still not satisfied, you can contact the Financial Services Board (FSB):
0800 202 087. The FSB will only handle a complaint if the law has been broken.
For additional information, contact the South African
Insurance Association on (011) 726-5381

KE NAKO!
It is time to be in control of your future:
PLAN to SAVE
SAVE for the FUTURE
INVEST in INSURANCE,
when this is relevant to you,
to cover the risk of LOSS and DAMAGE
to your goods,
your property and
your life.
SAIA
Developed and produced on behalf of
the South African Insurance Association
9 780981 432281