Why is insurance a need rather than a want?

It’ll be ok!

It won’t happen to me!

I’ve never needed to claim before!

It costs money!

Someone will look after me!

The Simple English Wikipedia describes Insurance as “… a term in law and economics. It is something people buy to protect themselves from losing money. People who buy insurance pay a “premium” (often paid every month) and promise a duty of care”

There are so many different kinds of insurance, how many do I need, do I need them all?

Popular types of insurance are: Car, Buildings, Home Contents, Life, Travel, Pet, Health, Income Protection, Mobile Phone, Motorbike,

When is not having insurance a risk worth taking and when does ignoring it become reckless behaviour?

Some types of insurance are a legal requirement, such as car insurance, that makes it a need! Often mortgage lenders will require a borrower to have a life insurance policy and a buildings policy in place – again therefore a need. Both these types of insurance are a protection for your asset (car and house)

Travelling abroad is often easy, popular and affordable. What does travel insurance add to your experience? Apart from assurances and potential financial compensation around travel delays, cancellations and lost luggage, everyone is at risk of ill health or accident and the care we take for granted in the UK often come at a (very expensive) price abroad. Even when there is a reciprocal health care agreement in place with the UK, travel home following such an event does not form part of the care package. Is being unable to access health care or languishing in a hospital far away from loved ones the price of the risk?

Are we frightened/scammed into over-insuring? Having two insurance policies for the same thing or an insurance policy that was not relevant is often a result of mis-selling e.g. PPI (Payment Protection Insurance) – have you seen the ads about reclaiming PPI and the looming deadline? Checking whether a house contents policy covers mobile phones or students’ belongings when away from home is worthwhile and may save some money.

What would you do if you lost all your belongings (by theft or fire)? How would you cope if your pet became ill, if you lost your job…… would you want to try and maintain your current lifestyle? All are personal questions that need to be answered to determine what you need and want!

Reading the small print, being aware of existing insurance policies in place, shopping around and comparing prices are essential. Being aware of the potential costs and value of the loss (personal loss as well as monetary) that you are willing to bear, as well as the impact on your loved ones, can determine what level of insurance you need and want in your life.