The Importance of Insurance
Many homeowners might not have reviewed their insurance over the years and I would encourage you to do so. I am talking about personal life insurance as well as house insurance. I am also referring to both parties if you are married. In my years as an Estate Agent, I have seen many different situations play out where families were underinsured, or not insured at all.
If you purchase a property today and you apply for a loan, it is on condition that you do take life insurance so that the bond is settled in the event of death. The banks will not register bonds any longer if the insurance is not submitted to the bank. This is a good thing. It offers protection for the bond to be settled immediately, so that the bank is paid and you do not need to leave your home. However, this is not sufficient. If your partner passes away and you do not have sufficient insurance to cover the bond as well as all the other costs that are attached to owning a home, you could be in trouble. Most estates take 1-2 years to wind up and all bank accounts of the deceased are frozen.
It is preferable to have a higher insurance pay out on your life so that you can manage for the next year or so. You need to plan for both husband and wife, especially if you both work. You need to be able to afford your home and the costs in the event of you losing a partner. This will give the bank and the family peace of mind.
I know we don’t have many instances of homes burning down, only two in my 29 years of property but, be prepared. I look at what has happened in Knysna and nobody would ever have thought such a terrible thing could happen.
I think as we grow older, we forget about these things and this is just a reminder to buckle up and get yourselves organised.
Author: Gaye Cawood