Insurance should be a safety net against financial ruin, not a grab-bag of costs that drain your monthly budget. The challenge is knowing what cover matters in South Africa’s unique context, and what you can live without.

First priority is health. Here that means medical aid or, if you cannot afford full cover, at least a hospital plan. A single admission for surgery can cost well over R100 000, and state hospitals are not always a safe fallback. If you drive, short-term car insurance is essential, at minimum third-party liability, since one crash could leave you owing millions in damages.

Likewise, homeowners’ insurance is non-negotiable if you have a bond, and wise even if you own your home debt-free. It covers fire, storm damage, and burglary. For breadwinners, life insurance is also vital. It ensures children or dependents are provided for should something happen to you.

Where South Africans often overspend is on smaller policies that cover manageable risks. Cellphone and appliance insurance, funeral cover stacked on top of existing life policies, and extended warranties often deliver poor value. Funeral cover in particular is heavily marketed, but a properly structured life policy already provides that benefit. Credit life insurance sold with loans is another area to watch, as it duplicates existing life cover at inflated rates.

The rule of thumb is clear: insure against the big shocks, serious illness, death, car accidents, and property loss. For the rest, self-insure by keeping an emergency savings buffer. That way, you protect yourself against what could destroy your finances without being trapped in premiums for risks you can easily absorb.