Insurance: keep or scrap?
It's becoming more common for families to reevaluate their insurance policies due to the current cost-of-living crisis. Many are considering cutting costs and wondering if they should keep or scrap their insurance policies. Some are even cancelling policies before making serious decisions. It is essential to fully understand what each policy covers, how it works, and whether it is a legal requirement. However, seeking professional advice is crucial rather than simply having a personal understanding.
I'll try to explain this in simple terms so even I can understand. Insurance is an arrangement in which a company agrees to provide compensation for specified loss, damage, illness, or death in return for payment of a premium. You pay a fee; if an unexpected event occurs, the insurance company will cover the loss up to a specific limit.
Many insurance policies come with an excess, which is the amount you're responsible for in each claim. This can feel unfair, especially when we're already paying significant annual premiums. For instance, with car insurance, you might have to cover the first £500 of any claim. If you're struggling to manage the costs of mandatory policies like car insurance and building insurance, there's a solution. Engage in a conversation with your policy provider. They might be open to adjusting the cover, increasing the voluntary excess, or offering an alternative product. They might even consider changing your payment plan from annual to monthly. The key is to take control and find a solution that suits your needs.
By the way, I am NO expert, just a regular mum, and you SHOULD seek professional advice.
Here are some types of insurance: 👇👇
Vehicle insurance: If you drive, yo must legallyo have motor insurance. There are two types: third-party or fully comprehensive.
Home insurance: this is like a safety net for your home. It covers you in case of fire, flood, damage, or theft of your stuff. It's a bit like having a spare set of keys for your house when needed. Home insurance generally covers the cost of replacing your belongings if they're damaged, destroyed, or stolen, but you might have to pay a bit extra each time you make a claim. In some cases, they even replace items. Pretty cool, right?
Building insurance: If you have an outstanding mortgage, your lender will likely insist you have building insurance. If there is debt on your property, all mortgage providers will insist on you having building insurance as it is a legal requirement. This covers the structure of your home, the physical building yes the detached garage too, and the fixtures and fittings inside that cannot be removed, such as windows, bathtubs, etc. Even if you don’t have a mortgage it is reckless not to have a building home insurance policy. It has its pros and cons.
Life insurance: there are quite a few types of life insurance, and an independent financial adviser will be the best person to tell you what works best for your family. You often pay monthly premiums, and it is best to think of life insurance as a long-term expense that you put in place for peace of mind. (there’s loads out there) A life insurance policy is a life cover policy that is in place until you die. It is a lifetime policy that you pay from the start of the policy for your entire life. There is
Term life insurance is a life cover policy that runs for a specified number of years, for example, 25 year term policy.
Over 50s life cover is a cover you take once you are over 50 years old. Often, you can take out much more affordable coverage to ensure your funeral costs are covered.
There is also critical illness coverage and terminal illness coverage, and you can also get children’s coverage. You can also get policies which cover both partners in a relationship and pays out to the remaining spouse or named beneficiary.
You can also get other insurance, such as pet insurance, health insurance, dental care insurance, renters insurance and motor breakdown coverage. There is also something called a multi-cover policy that covers travel, car breakdown and phone insurance.
Be insurance savvy if you can ☺️☺️