How to protect yourself, your family and your possessions
Last reviewed 30 December 2016
Choosing the right type of insurance for your needs can be tricky. This guide looks at the different types of insurance available, how to choose the right cover and when and how to buy it.
What is insurance?
Insurance is designed to protect you against the financial impact of certain events happening. It involves paying a regular or one-off premium to an insurance company which then promises to pay out either a set amount or a pre-defined amount if a certain event occurs.
When you might want insurance
You can buy insurance which pays out a lump sum or income if you lose your job, fall ill or die. You can also take out insurance to protect yourself against the financial impact of your belongings being lost, stolen or damaged. You can have insurance to help with the costs of unexpected medical treatment either for yourself, someone close to you or a pet. Or you may want insurance which pays out if you have to take legal action against someone or a lawsuit is filed against you.
How to choose insurance
Insurance is often sold on the basis that it offers peace of mind – if you take out insurance you can be financially prepared for the worst or the unexpected. But before you do it's worth thinking about what other protection you might already have (such as savings) or what would be available if something bad or unexpected happened (such as state benefits).
You can then look to plug the gaps by taking out appropriate insurance.
Some insurance products are compulsory such as car insurance if you own a car on the road.
If you work for an employer, you may have some insurance cover as part of an employee benefit package. This might include life insurance, critical illness insurance and income protection insurance if you have to give up work due to ill health.
How to buy insurance
If you don't think you have adequate insurance you might want to take this out yourself. There are several ways to buy insurance and the way you choose will depend on the type of insurance you want and the sort of advice, if any, that you require.
- General insurance such as car, home, pet and travel insurance can be bought direct from a provider, through a comparison site or from an insurance broker.
- Life insurance, income protection insurance and private medical insurance can be bought direct from a provider but also through advisers as people often need advice when choosing this type of insurance.
Help choosing insurance
Choosing the right type of insurance and the best levels of cover to protect yourself against a particular event can be tricky. Not only might there be several types of insurance which might be appropriate but levels of cover might vary between providers.
If you know what you want and are confident you can choose the best insurance cover for your needs you could buy direct, through a comparison site or discount broker which might save you money.
If you would like some help choosing then you will need the services of an insurance broker or a financial adviser.