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‘Do I Need Insurance?’

Everybody asks themselves ‘Do I need Insurance?’ at one time or another and the very simple answer to this common question is YES you do!   It is a fact that almost every aspect of our lives involves insurance: if you drive a car you must be insured, you have possessions that need to be insured, your life and health need to be insured to protect both you and your family, the list goes on.   Leaving yourself uninsured may put you in a very precarious position so it is important to understand why the need for insurance is something that is so critical to each and every one of us. At the same time you should evaluate if existing policies are still relevant.  As a member of the Armed Forces you probably have worldwide cover for permanent and temporary military kit that is issued to you, will you need this cover when you leave?   Why pay for it if you’re not going to need it.

In searching for insurance on-line you may come across the terms ‘Insurance’ and ‘Assurance’ generally the word ‘insurance’ refers to providing cover for something that might happen such as theft or damages whereby ‘assurance’ is cover for an event that is going to happen.  ‘Insurance’ is the generally accepted term but people using this description are often corrected.

Different types of insurance

  • Travel insurance: Designed to pay out if your holiday is cancelled, your luggage is stolen and - most importantly - if you become ill or have an accident. If someone falls ill while on a foreign holiday, the medical treatment could run to tens of thousands of pounds, which you may have to pay for if you don't have travel insurance.
  • Contents and building insurance: Contents insurance covers the contents of a home such as furniture, carpets, clothes, television, white goods, jewellery and so on. In other words, what you would take with you if you moved. Buildings insurance protects against damage to the actual structure of the home and to its fixtures and fittings. Contents and buildings policies can be bought separately or together in one package.
  • Car insurance: Car insurance isn't an optional extra; the law says that you must have basic car insurance (called 'third party') before you're allowed to drive on the roads. It means you're insured should you injure other people or cause damage in an accident.
  • Life insurance: A life insurance policy is a means of providing for your dependents should you die early.
  • Private medical insurance: This covers the costs of private medical treatment for curable or treatable short-term illness or injury. It means that, should you become ill, you could be treated immediately privately rather than being put on an NHS waiting list.
  • Income protection insurance: This allows you to insure your income if you become too ill to work later on in life.
  • Accident, sickness and unemployment cover (also known as PPI): If you are planning on buying a house or taking out a loan, you may want to consider payment protection insurance in case you become unemployed or ill. However, these policies can be expensive.
  • Pet insurance: This helps you foot the vet's bills if your pet gets poorly. By paying regularly into an insurance policy it means you have paid for the bill gradually rather than having to find the money in one go (possibly when you can least afford it).

Excess charges

Insurance policies often have hidden costs and hard-to-understand small print. Look out for 'excess' charges; the higher the excess, the more of the first part of any claim you will have to pay. Some policies have an excess of £50, others of £200. You can sometimes reduce the premiums you pay by volunteering to take a larger excess.