Insurance is available so that you can protect yourself financially against an unexpected negative event, for example illness, injury, death or burglary. If any of these things does happen and you’ve taken out a relevant insurance policy, the insurance company will pay out an agreed amount. If the event you’ve insured against doesn’t happen, you won’t receive any money but you’ll have the benefit of peace of mind.
Deciding what insurance you need
Consider the following scenarios to decide what types of insurance might benefit you most.
Can you afford insurance?
Create a budget to track your income and outgoings each month. Remember though to think in the long term. Even if you feel that there is no room in your budget to pay for insurance, consider what would happen if an unexpected event were to occur. It could be far more damaging than finding a few extra pounds each month.
How would you cope if you or your partner couldn’t work?
Payment protection policies are available that will pay out in the event that you or your partner can’t work. Check the policy carefully and ensure your understand it as many policies will contain exclusions.
Financial protection for your loved ones
No one wants to think about death but many people choose to take out life insurance policies which will pay out in the event of their death. It helps to provide financial security for families who lose an income when someone dies.
Own your own home?
If a flood or fire destroyed the house you own, you would still be liable for the mortgage payments. In most cases, you’ll be unable to get a mortgage without proof of buildings insurance.
Could you afford to replace all your possessions?
Whether you rent or own your own home, contents insurance is worth considering. If your possessions were all stolen or damaged, could you afford to replace them? If you do take out this type of insurance, you need to ensure that you have adequate coverage as some people do end up under insuring.
Private health insurance and dental treatment cover
Health insurance and dental treatment insurance is well worth considering. With medical insurance, you’re likely to be seen faster than you would be on the NHS and you’ll also have much more choice over when and where you’re treated.
Car insurance
If you have a car, you’re legally required to have motor insurance.
Got pets?
Vet treatment can be extremely costly. If you take out pet insurance, part or all of the vet’s bill will be covered. Be careful to ensure you understand any conditions that aren’t covered.
Holiday cover
Accidents and mishaps whilst you’re on holiday can be potentially expensive. This could include lost luggage, cancellations or the cost of medical bills if you get injured or become ill whilst abroad.