This was the headline in the Mail on Sunday this Sunday. The article quoted radio presenter Danny Baker who thinks that insurance is a waste of money and encourages people to live in a constant state of anxiety.
Everyone has an opinion about insurance and the majority are not that positive. However it is when you do need to claim on a policy that you realise its worth.
I don’t mean the small claims for a lost or stolen phone or pair of sunglasses. I mean the big claims such as claiming on your medical travel insurance after having a heart attack in America. You may then need to be repatriated back to the UK. This could cost upwards of £25,000. When you make this type of insurance claim, that £100 travel insurance policy suddenly seems very good value indeed.
The other insurance products looked at are below with why we don’t think these policies are a waste of money:
This is generally sold alongside a mortgage. According to the Institute and Faculty of Actuaries, the chances of a 35-year-old man being struck by a critical illness before the age of 65 are one in seven. For women, the chances are one in eight. If you are affected by a critical illness and are the main breadwinner, how will you pay the mortgage or feed your family without a policy in place?
According to the Office for National Statistics, one in sixteen of us could be off work for six months or more due to illness or disability. Premiums can be high for this type of policy. However, Incapacity Benefit was being scrapped for new claimants at the time, with Employment and Support Allowance as its replacement. This could offer up to £100 per week, depending on your circumstances. If your employer doesn’t offer a good period of sick pay, I would seriously consider taking out one of these policies. However, do shop around.
The law states that you must have a minimum of Third Party Only insurance cover if you drive or keep your vehicle on a public highway. So if you do want to have a car, there is no getting away from this one.
Home Insurance: If you have a mortgage, your lender will insist that you have buildings insurance. This covers the rebuilding cost of your property. Buying contents cover is up to you. The same applies to buildings insurance if you don’t have a mortgage. However, think about how you would manage if a burst pipe completely flooded your home. You may have to move out until the property dries out. Ask yourself how you would pay to replace anything damaged or ruined. You may also need to pay for alternative accommodation.
If you have dependants it is always advisable to have some form of life insurance, you wouldn’t want to think of your family homeless if the main bread winner dies.
Now, if like Danny Baker you have a multi millionaire friend, you probably don’t have to worry. They could always bail you out, and then, if you have the earning capacity, you will easily be able to pay them back once you are able to return to work. But unfortunately, for the man in the street, they don’t have this luxury. This is why making sure you have the correct insurance policy for your needs is so important. The key is to always shop around. Don’t just depend on the comparison sites to do your shopping around for you. Always read the policy to make sure you are covered for what you think you are covered for, no matter how laborious you think it is.
