Anything you cherish. Is it your children, spouse, dependants or your assets, they all need to be protected.
That explains why insurance should be seen as need and not a want.
George Onekehna, deputy commissioner for Insurance, Finance and Administration, National Insurance Commission (NAICOM) said the worst financial mistake you can make in life is not to think about those you are leaving behind should death come.
Onekehna who describes this as ‘financial irresponsibility’ noted that no matter the level of comfort you give your dependants, if you do not provide for their tomorrow you have not done anything.
“What happened to them when you are gone regarding children’s education, mortgage, outstanding debt and other basic necessities of life are critical”.
Experts say insurance is necessary in ensuring that your assets are protected against theft, fire or other natural disasters that could undermine their value or existence.
“Insurance is there to provide protection for yourself, your investment and your business. Disaster could take any form; car breaks down, roof leaks, a major home fire, an automobile accident that leads to a legal action and someone in the family becomes ill.”
“Insurance gives you peace of mind and you know that if anything happens to you, your family or your business that you will be financially secure. The best course of action is to prepare for the worst and hope for the best.”
Types of insurance
It’s unlikely that you’ll need every insurance product on the market, even if you could afford them all. But how do you know whether your hard-earned cash is going on the policies you need the most? The table below is designed to help you make the right decisions for you and your household budget. Here Moneyadvice provides some insights to some of the products.
• Home insurance
• Car insurance
• Travel insurance
• Life insurance, critical illness, income protection and payment protection
• Private medical and dental insurance
• Pet insurance
Home insurance
What does home insurance cover? Do you need it?
Buildings insurance
• Covers the cost of repairing or rebuilding your home if it’s damaged by storm, floods, fire, lightening, subsidence, etc
• You won’t be covered for general wear and tear
• You’re unlikely to be covered for properties left unoccupied for more than 60 continuous days Yes, it is a legal requirement if you own your home, plus mortgage lenders normally insist on you having buildings cover.
• Repairing your home can be very expensive so buildings insurance could save you a fortune in the long run
• You’ll need to read your policy document carefully to check what is and isn’t covered
• Buildings insurance – Do you need it?
Contents insurance
• Covers your possessions for loss or damage
• You won’t be covered for general wear and tear
• It usually doesn’t cover properties left unoccupied for more than 60 continuous days Yes, for most people it’s vital in case your home is burgled or there’s a fire or flood.
• You can usually get a new item to replace your damaged or lost one
• You can choose to get cover in case you lose items outside your home
• You’ll probably need to pay an excess on every claim and your premium will probably rise the following year
• Some items are only insured up to a certain limit, so you may need to pay for extra cover for these
• Find out more – Do you need contents insurance?
Car insurance
What does car insurance cover? Do you need it?
Car insurance
There are – three types of cover:
• Third party – this covers other people (such as your passengers) involved in an accident, or damage to other people’s property, but if your car is damaged or stolen you have to pay for it yourself
• Third party, fire and theft – like third party but covers repairs or replacement if your car is stolen or set on fire
• Comprehensive – covers everything above and also covers damage to your own car Yes, you are legally obliged to have at least third party cover.
• It protects you against personal injury claims which can run into millions of pounds
• Driving without insurance will lead to disqualification from driving and possibly prison
• Insurance for young, newly qualified drivers is very expensive
• If you need to claim there is often a gap between what the insurer pays out and the cost of replacing your car
• Find out more – Car insurance – choose the right level of cover
GAP (Guaranteed Asset Protection) insurance
• Covers you if you write off your car – it pays the difference between what your motor insurance policy pays out and either:
• What you paid for the car
• What you still owe on the car, or
• What it would cost to buy the same car new
• It only covers you if your car has been labelled a total write-off or unrecoverable You should only consider it if you owe your car dealership more than your car is now worth.
You don’t need it if:
• You consider the cover from your motor insurance policy is sufficient
• You’ve an ‘agreed value’ car insurance policy
• You’re using a finance agreement that already covers you for the difference between the book price and how much you paid
• You got a big enough discount on your car to cover any depreciation
• GAP insurance enables you to get a replacement car equal to the one you had
• You might not be covered for as much as you’re expecting – for example non-standard extras on your car, or a high excess.
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