Chapter 12 - Consumer Law
Insurance is the financial protection that people get when they pay a certain amount of money every month to an insurance company. Then if something is lost or stolen, the insurance company pays the person – also called a claimant - out.
Remember, if a person who is insured does not lose anything, or if their property never gets stolen, or if they never claim from the insurance company, then they cannot claim back the money that has been paid to the insurance company.
There are many different kinds of insurance. It is useful to get a salesperson from a reputable and well-established insurance company to explain what the options are and what would be best for your requirements. Ask the following questions:
ASSURANCE is different from INSURANCE because it is to do with life instead of possessions. Life assurance is a monthly amount paid by someone so that when they die, a certain amount of money will be paid over to the family.
It is not a good idea for someone to cash in their life assurance while they are still alive. If they do this, then the amount that they will be paid will be very small compared to what they contributed every month. The longer the policy continues, the more money will be paid out.
Short-term assurance is a policy that can be taken out over a certain period of time (for example, 10 years). If something happens to the policy-holder during that time, then the insurance company pays a set amount to his or her family. But if the person does not die within that time, then at the end of the time of the policy, the contract with the insurance company is over and the policy-holder CANNOT get any of the money back.
Insuring a motor vehicle
Every person who buys a vehicle should make sure that it is insured. People who take out insurance have to pay the insurance company a certain amount of money each year. Insurance companies provide compensation when people are injured or property is damaged.
Insurance companies protecting people against injuries may give cover for medical bills, lost wages, pain and suffering and disfigurement (where a person's body becomes deformed).
If the insured person dies, an insurance company may pay medical and funeral expenses and compensate the people whom the dead person was supporting. Most motor accident insurance policies provide compensation for injury and death.
The Road Accident Fund automatically covers third party insurance. This does not cover damage to the person’s property (including your car).
Comprehensive insurance is not compulsory but it will cover a person if their vehicle is damaged in a motor accident. Comprehensive insurance gives all the benefits of balance of third party (in other words those costs that are not covered by a third party claim), fire and theft insurance as well as cover against damage to the vehicle no matter how the damage to the car was caused.
This kind of insurance is money that a person pays to the insurance company every month so that at the end of a specific period of time the policy-holder can be paid out a lump sum of money. Examples of this insurance are Endowment Policies.
A retirement annuity is money that a person pays to the insurance company which cannot by law be touched until they stop working due to old age (55 years minimum). The amount that is paid out becomes the person’s pension. They can only take a third in a cash lump sum. The rest is used to pay a monthly pension.