Protecting your home Although you have no legal obligation to
insure your home, your mortgage company will want to protect
their investment with buildings insurance. However, it is also
worth protecting your own investments, so even after you’ve paid
off your mortgage, you should ensure you’re financially covered.
Home contents insurance and personal possessions insurance
According to Money Observer, the average home has £44,000 of
contents and replacing this without insurance would be almost
impossible for most people. An average premium is about £150 a
year and will provide cover up to £50,000. The majority of
contents insurance policies additionally provide public
liability and personal legal expenses and although most people
don’t claim on these, they could be very useful if needed.
Personal possessions insurance is worth taking out because often
it covers your belongings outside the home, as well as inside
the home, and is often incorporated into your contents
insurance. Personal possessions insurance is also frequently
referred to as all risks insurance and offers cover on
possessions that are lost or stolen outside of the home.
Income protection Income payment protection insurance is
recommended by most insurers as the most appropriate way to
safeguard your mortgage repayments and any other monthly bills.
Kevin Carr, a senior technical advisor at LifeSearch believes
that this is a better option than payment protection alone,
including accident sickness unemployment (ASU) and mortgage
payment protection insurance (MPPI). In a recent statement, Carr
revealed that “the banks and mortgage lenders make huge profits
from sales of payment protection. For instance, 17% of Lloyds
TSB’s profits come from this.”
Debts – you don’t want them to haunt you In addition to
safeguarding your income to assist with loan repayments, you may
also wish to consider personal finance products such as life
assurance and critical illness insurance, which, under certain
conditions provide a lump-sum that can be used to pay off the
mortgage in difficult circumstances. The choice of life
assurance or critical illness cover will depend on personal
variables. For example, if you are single and have no
dependents, then nobody would benefit from your life being
heavily insured. However, should you be diagnosed with a serious
illness, a lump sum might be helpful to ensure you maintain a
reasonable quality of life. Personal accident plans can be
helpful if you believe the specific conditions of the policy
would be relevant to you. Examples include insurance providers
such as Nationwide who will provide cover of around £50,000 for
the loss a limb, £10,000 for a hip and £2,500 for a toe, in
relation to a premium of £4.95 month.
Health insurance / private medical insurance There are many
difference financial products available for insuring your health
and they vary in accordance with your stage as life. Examples
include critical illness insurance, as discussed above, as well
as long-term care insurance and medical insurance, which may
also be referred to as private medical insurance or simply
health insurance. Wikipedia argues that health insurance is one
of the more controversial forms of insurance due to the
tumultuous debate of insurance companies remaining solvent,
against the needs of its customers to actively protect their
health.
One of the main problems insurance companies face is the issue
of “adverse selection”, a term used to describe the increased
likelihood of sick people signing up for health insurance.
Health insurance companies argue that those people seeking
health insurance are often those with existing medical problems,
those who are much more likely to have medical health insurance
problems in the future and those who may engage in “risky
behaviour” such as excessive alcohol consumption and smoking.
Products such as health insurance tend to fuel fiery debates of
the moral argument of health insurance costs and the question
that if people pay for health insurance, are they more likely to
lead a “risky” lifestyle in the knowledge that they are covered.
Travel insurance Travel insurance isn’t complicated, but there
are a few considerations you should bear in mind. Travel
insurance typically covers issues such as cancellation, loss of
baggage and medical expenses. However, Money Observer ( http://www.moneyobserver.com/<
/A> ) recommend better value by including baggage cover in your
personal possessions insurance and not as part of your travel
insurance policy. The consumer financial magazine also
recommends extending your motor insurance – to ensure your car
is covered when driving abroad.
Moneynet ( http://www.moneynet.co.uk/
), a personal finance consumer information site, makes the point
of shopping around for your travel insurance and avoiding the
high street travel agents. According to their insurance guide:
“Since January 2005, it is especially important to avoid the
travel agents when buying travel cover; from that date, the
insurance industry falls under the regulation of the Financial
Services Authority, giving that body the ability to investigate
and take action on behalf of consumers. Tour operators and
travel agents, however, are not subject to this regulation, so
if you have a complaint about travel insurance purchased from a
travel agent, the FSA and the Financial Ombudsman Service will
not be able to intervene on your behalf.”
In a recent press release, moneynet also blasted high street
travel agents for exorbitant insurance, stating that, “major
high street players like Thomas Cook, Thomson and Travelcare,
which between them account for around 70 % of the travel
insurance market, levy premiums that are typically twice as
expensive as buying cover online.”
Weddings – insure your finances for better and for worse
Insurance may not be romantic, but it’s important and if your
wedding doesn’t go according to plan, it can be very expensive.
Wedding insurance will typically cover dress damage, loss of
rings and retaking the photographs if anything goes wrong with
the photographer or prints.
Insurance doesn’t always come with guarantees, but shopping
around to make sure you have the most appropriate protection for
yourself, your partner and your family will give you a certain
amount of peace of mind.
Disclaimer: We only show you the way – it is up to you to follow
the path of enlightenment. All information, is intended for
general information only and should not be construed as advice
under the Financial Services Act 1986. You are strongly advised
to take appropriate professional and legal advice before
entering into any binding contracts
Rachel Lane
http://www.articlesbase.com/finance-articles/inside-insurance-protection-priorities-3281.html
