Short Term Insurance

Short Term Insurance

It’s possible to insure just about any aspect of your life, from home contents insurance, to car and travel insurance.  You could spend your entire income on insurance but basically it boils down to how you as an individual view risk and how you prioritise what’s most important to you.

Insurance is a way of protecting yourself and your belongings in case an unexpected event happens. It’ll pay out a pre-agreed amount, or cover the costs of repair.  Not having insurance means that you’d have to pay to replace an item or even go without it, but sometimes that can be the more cost effective option!.

Summary

Insurance is a way of protecting yourself and your belongings in case the unexpected happens.  Insurance pays out a pre-agreed amount.  Insurance policies involve getting quotes, paying the agreed amount for a certain length of time and a cancellation period.  It’s also something that needs to be renewed.
Whether renting or buying you should probably look at sorting out some life insurance, contents insurance and income protection.  If you’ve bought a house then buildings insurance is a must.

What is your attitude to risk?

Whether you choose to take a gamble or lock your money away somewhere safe it all comes down to your attitude to risk. So are you a risk taker, or super-careful? Take this quiz to find out.
Simply choose the one of the answers from the questions below and then check whether you answered mostly A’s, B’s or C’s.

1    Which best sums up your attitude to life?
    a)    Life is an adventure full of surprises
    b)    Life can give you some horrible shocks
    c)    Life has its ups and downs

2    Are you a lucky person?
    a)    Generally, yes
    b)    Generally, no
    c)    Not lucky, but not terribly unlucky either

3    What do you worry about?
    a)    Nothing much
    b)    My health, my job, my family, the environment, war, floods - everything!
    c)    My main worries are about family and friends

4    If you were given £10,000 to invest for the future, would you:
    a)    Put it into stocks and shares or a new business
    b)    Put it in a reputable building society
    c)    Divide it up and have a range of investments, some safe, some more risky

5    Do you worry about what would happen to your family if you became seriously ill?
    a)    No. If it happens I’ll deal with it
    b)    Yes, so I have critical illness and income protection insurance as well
    c)    I’ve thought about it, and I’ve got an emergency savings fund

6    You’re taken seriously ill on holiday abroad. How do you cope?
    a)    The travel rep will sort things out
    b)    I have an annual travel insurance policy, so the cost of healthcare isn’t a problem
c)    If I’m on holiday in the EU I’m automatically covered for healthcare. If I’m going elsewhere I take out insurance.

7    How do you feel generally about insurance?
a)    It’s a waste of money. Life is risky; you just have to deal with it.
b)    It’s a vital safety net for when things go wrong
c)    It’s a useful way of protecting yourself

8    A friend of a friend is selling a new laptop at an unbelievably low price. Do you:
    a)    Snap it up, before someone else grabs the bargain
    b)    Say no. You only buy from stores which offer a warranty
    c)    Check carefully before buying. If something looks too good to be true it usually is.

9    How do you feel about gambling?
    a)    I often have a bet or go to the casino. You can make money if you’re clever
    b)    It’s a waste of good money
    c)    The occasional flutter is fun, but I don’t expect to win

10    Do you think that taking a risk:
    a)    Usually pays off
    b)    Usually ends in disaster
    c)    Can pay off if you’re careful

How did you do?

Mostly A’s = High risk taker.

If you’re in this category you’re probably an optimist and someone who’s so busy living for today that you don’t worry much about the future. You may be young and without the responsibilities of children and a mortgage – so you don’t lose sleep worrying about how you’re going to buy nappies or pay the mortgage if you lose your job.
Your impulsive, optimistic streak means that you seize opportunities that more cautious people miss out on, which is great. But the risks you take won’t always pay off and, no matter how lucky you feel, things can and do go wrong.
It’s always worth having an emergency savings fund to cover yourself when disaster strikes.  Maybe you’re not interested in insurance, but give some serious thought to how you’d manage if the contents of your home were ruined by a fire or stolen by burglars. Could you really cope without your mobile, TV and computer?

Mostly B’s = Low risk taker.

If you’re in this category you’re probably someone who tends to worry about things. You may have a family or dependents relying on your earnings and you feel responsible for their well-being. You feel that life’s risky and unpredictable and so you like to do whatever you can to make it feel safer – like taking out insurance to cover every possible disaster.
There’s nothing wrong in taking a cautious approach to things, but sometimes the costs outweigh the benefits. Read the small print of your insurance policies to make sure that they are relevant to your situation, otherwise when you come to claim you may find that you’ve poured money down the drain. Shop around for insurance; it can save you hundreds of pounds. And remember that people who always invest their money in very low risk investments may not lose anything, but they may not gain much, either. By taking just a few more carefully calculated risks, you could find yourself better off.

Mostly C’s = Calculated risk-taker.

If you’re in this category you’re a realist. You know that for every boom there’s a bust and you understand that flood, fire, theft and redundancy could happen to you. You’re willing to take risks, but only if you’re sure the odds are on your side.

Because you’re realistic, you have insurance to cover the most important things in life. You also save money when things are going well, so that when things get tough you don’t have to suffer.
There are so many different types of insurances on the market today it’s very difficult to know which ones are best for you. You could fall into the trap of setting up many individual insurance policies to protect yourself and your family for almost anything when maybe one or two could do the same thing.  Stop and consider what you really need, what you can really afford and try to prioritise.  Do a ‘what if’ scenario & think about how you and your family would cope in the event of unexpected events.

There are so many advantages to investing in an insurance policy, if ever the worst happens, having cover will not only ease any financial burdens but it will give you the peace of mind which will allow you to deal with any of life’s lows. Buying a house is probably going to be one of the biggest purchases you will ever make, this why it’s always a good idea to prepare for the future, taking out the relevant insurance and making a will are two methods of assuring that your family will have some financial assistance.  

Types of insurance-

•    Buildings insurance- covers the costs of rebuild- i.e. fire/flood. If you are renting, then the owner of the property will need to check that cover is in place, however if you purchase a property then it is your responsibility to make sure you are covered.

•    Contents insurance- covers household contents i.e theft, accidental damage. Whether you are renting or buying, then you will want to make sure that your belongings are protected, and you should therefore take contents insurance out.

•    Life insurance – leaves a lump sum to your family in the event of your death. This will help them maintain a certain level of lifestyle and cover all debts. Can be mortgage related (mortgage protection insurance) or family related (leave lump sum to family in excess of mortgage debts). Therefore, if you buy a property then it's a good idea to get life insurance to cover the outstanding balance of your mortgage, so that if you should die, then your outstanding mortgage can be repaid. Regardless of whether you are renting or whether you have purchased, you may also consider taking out additional family protection, so that in the event of your death, your dependants will receive a lump sum(or sometimes a regular amount) to help them financially in your absence.

•    Critical illness cover – provides a lump sum in the event of diagnosis of critical illness, i.e. cancer (you may not be able to work in event of critical illness and may face unexpected costs).You may decide to take this cover out if you are renting, or if you have bought as you would still have costs to meet in either circumstances.

•    Income protection – provides replacement income in event of sickness or accident resulting in inability to work. You may decide to take this cover out if you are renting, or if you have bought as you would still have costs to meet in either circumstances.

•    Payment protection insurance, or PPI, is insurance that will pay out a sum of money to help you cover your monthly repayments on mortgages, loans, credit/store cards or catalogue payments if you are unable to work because of an accident, sickness, or become unemployed through no fault of your own. You may decide to take this cover out if you are renting, or if you have bought as you would still have costs to meet in either circumstances.

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