12 Nov Safety features
Picture yourself at the car dealership. You’re with the family and it’s time for you to (finally) make a purchasing decision. The car you want is there and it’s in your price range, but the dealer is pointing you in the direction of another. This other car is pricier but has one major distinction. It has advanced safety features which can make all the difference in the event of a catastrophic car accident.
Part of every good financial plan is the careful consideration of insurance cover. As the famous idiom goes: the “best-laid schemes o’ mice an’ men gang aft a-gley” (put simply, the best laid plans often go awry). So when we consider the insurance cover for our clients, we believe in thinking beyond the superficial cost of coverage.
Features
Independent research on insurance products allows us to understand the true quality of an insurance policy and therefore weigh up its value for money. Insurance products, much like cars, come in basic form with minimal features that ‘get you from A to B’ and in premium forms which give you added protection and peace of mind.
Premium Structure
To start off, there are several payment options available when acquiring a vehicle:
- Paying cash up-front
- Taking out a lease
- Borrowing the money (with or without a balloon payment built in)
Each one has its pros and cons, but ultimately the cheapest option is to pay cash up-front – even though it’s the most painful in the short term. Again, insurance policies are not too dissimilar. Typical insurance companies offer stepped, hybrid and level insurance premiums. Stepped premiums are the cheapest upfront, but increase each year with age and inflation etc. – which I liken to borrowing money and dealing with the balloon payment when it comes along (although there’s no car to sell at the end of the insurance policy!). Level premiums are equivalent to paying cash in that the upfront cost is higher, but the premium remains level across the live of the policy. Hybrid is a combination of the two.
When you think about making a decision on your family car, the extra cost for the safety features pales in comparison to the thought of losing anyone special in your life. So you do the right thing for your family and hope that you never need to use the safety features. We certainly feel the same way about securing your financial future.
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About Reuben Zelwer
Reuben Zelwer established Adapt Wealth Management in 2011 to help time poor clients achieve financial freedom. For over 15 years, Reuben has helped professionals, executives, business owner and those approaching retirement make the most of their circumstances by making good financial decisions. Reuben’s professional practice is complemented by substantial voluntary work, which has included setting up financial literacy and savings programs in the local community. |