Inside Insurance Protection Priorities
Below is a MRR and PLR article in category Finance -> subcategory Insurance.
Inside Insurance: Protection Priorities
Summary: Protecting Your Home
While there’s no legal requirement to insure your home, your mortgage lender will want to ensure their investment is protected with buildings insurance. It's also beneficial for you to protect your investments, so even after your mortgage is paid off, make sure you're financially covered.
Home Contents and Personal Possessions Insurance
The average household has about £44,000 worth of contents, according to Money Observer. Replacing items without insurance can be challenging for many. An average premium of around £150 a year can cover up to £50,000 in contents. Most policies also include public liability and legal expenses, which can be valuable even if rarely used.
Personal possessions insurance is worthwhile because it often covers belongings both inside and outside your home. Sometimes called "all risks" insurance, it provides coverage for items lost or stolen away from home.
Income Protection
Insurers often recommend income payment protection insurance to safeguard your mortgage repayments and other monthly bills. Kevin Carr, a senior advisor at LifeSearch, suggests this is a better choice than payment protection products like accident, sickness, and unemployment insurance (ASU) and mortgage payment protection insurance (MPPI). Banks profit significantly from payment protection, with 17% of Lloyds TSB’s profits coming from it.
Dealing with Debts
To address loan repayments, consider products like life assurance and critical illness insurance, which provide lump-sum payments under certain conditions. Life assurance and critical illness cover depend on individual needs. For example, a single person without dependents might not benefit much from life assurance, but critical illness coverage can help maintain quality of life if diagnosed with a serious condition.
Personal accident plans may be suitable if the coverage aligns with your needs. For instance, Nationwide offers about £50,000 for the loss of a limb, £10,000 for a hip, and £2,500 for a toe, for a premium of £4.95 monthly.
Health Insurance
Various health insurance products cater to different life stages, such as critical illness insurance, long-term care insurance, and private medical insurance. This type of insurance can be controversial due to debates about the balance between company solvency and customer health protection.
A significant concern for insurers is adverse selection, where people with existing health issues are more likely to sign up for insurance. This scenario can lead to debates about whether insurance encourages risky behaviors, such as excessive drinking and smoking.
Travel Insurance
Travel insurance typically covers cancellation, baggage loss, and medical expenses. Money Observer suggests getting better value by including baggage cover in personal possessions insurance rather than in travel insurance. It also advises extending motor insurance coverage for driving abroad.
Moneynet recommends avoiding high-street travel agents for insurance. Since 2005, the insurance industry has been regulated by the Financial Services Authority, but travel agents aren't, which limits recourse for complaints. Moneynet criticizes agents like Thomas Cook and Thomson for charging double compared to online options.
Wedding Insurance
While not romantic, wedding insurance is vital. It covers issues like dress damage, ring loss, and retaking photos if problems occur with the photographer or prints.
Conclusion
Insurance may not offer guarantees, but by shopping around, you can find suitable protection for yourself, your partner, and your family, providing peace of mind.
Disclaimer: This information is for general purposes only and should not be considered advice under the Financial Services Act 1986. Always seek professional and legal advice before making any contractual agreements.
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