Insurance can provide peace of mind by helping you protect yourself and the people and things you love.
While the importance of insurance should be apparent, some types will be more relevant to your situation.
Insurance is a financial product that provides protection against loss, damage or theft. The list of what you can protect and get coverage for is almost limitless, with the most common relating to the things and people you love. For example, you can insure your home, car and phone. You can also protect your health and even insure your life so your family would be looked after if something happened to you.
Insurance is all about managing risk. Some insurance is compulsory, such as motor insurance for drivers. You might need other insurance as a condition of a contract, like buildings insurance if you have a mortgage. Most other insurance types are a matter of choice and involve you prioritising what's most important within your budget.
If you’re wondering where to start and how to make the most of your insurance cover, it may be worth prioritising the risks you'd find hardest to cover yourself. For example, most people would be unable to replace all their belongings after a serious fire or pay for medical treatment during a foreign holiday.
For other, smaller risks, you could consider putting regular savings aside in an emergency savings fund rather than taking out insurance.
Protecting what matters usually involves balancing the cost of insurance with the risks you face. Everyone is different, but there are several life stages where specific insurance coverage or protection may be particularly relevant. Here are some illustrative examples:
Mike, 30, is a college lecturer, living with his partner Jess. They recently bought their first flat and are expecting their first child. He wants the peace of mind that his new family will be safe and protected from whatever life throws at them.
They have both taken out life insurance. Mike also has income protection and critical illness cover in case he becomes ill. As well as insurance, both Mike and Jess have made a will, and they each pay into retirement savings plans.
John and Gloria are in their 60s, with John still working full-time and Gloria part-time. Their children have left home and started families of their own.
John hasn’t always been in the best health, so he pays for private healthcare coverage. They both have a will and life cover, which will protect either of them if the other passes away.
John has calculated that his retirement savings and insurance policies will enable them to retire comfortably at 65.
Nina is in her 40s, works full-time and has two school-age children. She recently separated from her partner and has moved into a new rented home. While the buildings insurance is her landlord’s responsibility, she has contents insurance which includes specific cover for a few pieces of jewellery.
She has been paying into a retirement savings plan, which her workplace contributes to, but she plans to increase her payments. She has also reviewed her life cover arrangements with her ex, to secure the children’s future.
Nina is planning a special holiday this year for her and the children, so has been shopping around for travel insurance as it's not provided through her bank account.
These examples can get you thinking about what protection you may need for yourself and your loved ones. It's a good idea to do your research and if you're unsure of what's right for you, ask for professional help or advice
