Paying for insurance goes against our nature when it comes to parting with our hard earned cash. In the end, we all hope that the money we pay for insurance will be a total waste.
After all none of us want to die early, or suffer some awful disease and have to stop working.
But how important is insurance really?
There is an old Financial Planner’s adage regarding the order of spending:
P – protection (i.e. insurance)
I – income protection (i.e. more insurance!)
P - pensions
S – savings
I – investments
Whilst this isn’t scripture, it gives you an idea of just how important insurance is to consider.
Note that’s consider, not necessary buy. I’ve heard people from all walks of life talk about insurance as being for people who are “scared to leave the house in the morning”. I disagree, but the point is that it’s down to personal choice.
Whether you take out insurance is entirely up to you. What’s most important is that you are making an informed decision.
Talk about low priority: 80% of us view a mobile phone as essential, yet only 28% think the same about life insurance.
Whilst it’s not an easy topic, and it can be tempting to ignore what might happen when you’re no longer around, when pushed most of us would want to ensure our loved ones wouldn’t be left destitute.
Let's say you or your partner were unable to work because you had a stroke (over 1 in 6 of us will) – would you be able to cover the bills on a single income?
Over a third of us couldn’t. What happens then?
Easy, we use our savings…. But with 20% having less than £1,000 put aside, and 30% having no savings whatsoever, that could be easier said than done.
How long wold you be able to pay your rent (not to mention council tax, food, water rates, electricity, etc.) out of your savings before you were forced out?
Some may be lucky enough to have an employer that pays insurance for us. Life insurance and private medical cover are relatively common benefits for larger companies.
Check what you’ve got to see if it’s enough to cover you.
There are myriad different types of insurance available for all kinds of eventualities; which unfortunately means it can be tempting to give up before you even begin.
It’s worth persevering. A simple place to start is the usual comparison search engines, or try Which?.
Educate yourself about what’s out there and the risks you might want to protect against, before deciding whether it’s a price worth paying.