One of the most common financial mistakes that people make is failing to plan for the risks that we all face in life. There are many risks that we can expect:

If you drive a car you are likely to get a flat tyre at some point, as a driver you plan for this eventuality by having a spare tyre and a jack to change the flat tyre when it happens.

In our financial lives we can take similar precautions by planning for some of the risks we will all face to reduce the financial shock.

Broadly the risks we face can be divided into three categories:

1. Short-term risk: this refers to things like a robbery, a car accident or a household emergency like a burst geyser
2. Medium-term risks: this includes risk of retrenchment or loss of work due to disability
3. Long-term risk: this includes the risk of an unexpected death or critical illness

Watch this video to find out why insurance is helpful in protecting you and your belongings when something goes wrong.