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What is the right type of insurance for you, and how do you find it?

Personal_Finance / Insurance Dec 03, 2020 - 11:15 AM GMT

By: Sumeet_Manhas


Insurance is available for all types of situations and can ease financial difficulties resulting from a burglary, accident or holiday being cancelled. Some countries will not allow visitors to travel there unless they have adequate insurance to cover all eventualities and it is compulsory in other areas of life too.

You will be fully aware that you cannot ride a motorbike or car without insurance and yet many people think it wise to rent mopeds while in foreign countries thus invalidating their travel insurance if they have an accident.

How do you know what type of insurance you need for your situation, and who do you ask for advice?

Different types of insurance

There are an almost endless list of insurance products on the market but here are the most common ones that you are likely to use.

Health Insurance

Covers the cost of medical bills, prescriptions and surgery. Its importance will depend on what country you live in and what level of care you require. For instance the UK has the National Health Service which is free. Other countries require payment for healthcare.

Vehicle Insurance

This is needed by anyone who drives a scooter, motorbike, car, van or other vehicle. There are different forms ranging from covering accidents to fully comprehensive that cover theft and damage. It is Illegal for vehicle owners not to have coverage adn to operate on roads and highways.

Home Insurance

If you owned a home outright then there would be no legal obligation for you to have home insurance. If you have a mortgage however then your lender will most likely stipulate that you need insurance cover. Buying a home is probably the most expensive purchase anyone would make so it makes perfect sense to insure it.

Life Insurance

This is a way of providing for your family after you pass away. There are different types of cover and which one you choose would depend on your age and other requirements. If you are young you may opt for a life term insurance policy which will last for a set amount of years before either being upgraded or renewed. Or, you may prefer to take out permanent life insurance that lasts for the duration of your life. This is more costly but has other benefits. If you have no dependents you may decide that you don’t need this type of insurance at all although you may end up with a Public Health Funeral.

Pet Insurance

Just like humans, pets get sick. Vet bills and medication costs can add up dramatically and if there is no emergency savings fund it can be a very difficult time deciding whether you can afford for your pet’s surgery to go ahead. Pet insurance takes care of this the same way healthcare insurance does for adults. Anyone with a pet should have this. It is a good idea to take out when the pet is young so the premiums start low and remain so.

Travel Insurance

Going overseas? Then it is vital to take out travel insurance. This is one area where many people skim over or ignore. Not reading the small print can lead to people invalidating their insurance claim or realising they were not covered enough for hospital bills or in the worst case, repatriation after a death. There may be an excess on your cover or you may need to claim within a time frame that is difficult if you are planning a long trip. One mistake many people make is to take out the policy online after they have left their own country. This will lead to a completely useless policy and a total waste of money.

There are other types of insurance for individuals such as umbrella insurance and renters insurance for tenants renting privately and who want to protect their personal items against theft and damage.

Business Insurance

Business insurance is a much trickier area than individual insurance policies. They have their own types of insurance and it can protect the buildings, contents, staff and other company concerns. There is both professional liability and product liability insurance which can cover claims against negligence and for damage caused by a businesses’ products. They will also cover their vehicles and often have business interruption insurance that provides for an unforeseen problem stopping production or a disruption to normal business.

One other area that businesses cover is keyman insurance. This is a very specific type of insurance to businesses that covers an individual who is greatly valued by the company. In the case of something happening to the insured keyman then the company would receive a financial benefit from the policy to compensate for the loss of such an important employee. Visiting can show more details on this unusual but important business insurance. An example of a keyman may be the founder of the company or the CEO.

Where should you get advice?

Businesses will have their own advisors although small businesses would need to speak to professionals about their own needs. As for individuals, couples and families then searching the internet for a start can help to compare different insurance companies and policies. Meeting a licensed insurance broker will also yield professional advice.

Insurance brokers can give good advice (check that they are licensed first) and will be able to offer a wide range of products. They may be able to offer policies that aren’t readily available and many people prefer to deal with a person face to face instead of across the phone or internet.

The biggest mistakes people can make with insurance policies are not using a reputable company or broker and taking out the wrong type of policy. You need to make sure the coverage is suitable for any eventuality and you will be able to claim. If you have no dependents then think again on paying for life insurance. If you are travelling abroad make sure the policy covers the activities you want to partake in. Insurance can be a lifesaver or it can be a waste of money if you choose the wrong type. And don’t forget your pet, you may thank yourself later down the line.

By Sumeet Manhas

© 2020 Copyright Sumeet Manhas - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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