It’s easy to take the meaning of the term “insurance” as an obvious thing; but how well do we really understand it? Preconceived notions about what insurance is, why it’s important and whom it benefits, can result in many misconceptions about the term. One of the ways to ensure you are able to benefit from insurance policies is to equip yourself with the right set of knowledge to make well-informed decisions. This site is the number one resource for all insurance related information that will help you take control of your life and the things that matter the most to you, as well as to make the most beneficial decisions regarding your insurance packages.
WHAT IS INSURANCE?
Insurance can be defined as a “risk-transfer” mechanism. This is a form of risk management in which the insured party transfers the cost of a potential loss/damage (that is a result of events/circumstances that are beyond their control) to another entity (an insurance company), in exchange for a monetary compensation, should the loss occur. The compensation can be either full, or partial, depending on the insurance agreement/contract. If the loss/damage that is specified in the contract occurs within the specified time period, the monetary compensation is paid to the insured party.
Read more about what insurance really is here: http://www.investopedia.com/university/insurance/insurance1.asp
HOW DO WE BENEFIT FROM INSURANCE POLICIES?
Insurance packages allow us to protect ourselves against significant losses and financial hardship due to a variety of unfortunate eventualities; they help you ensure that you and the things/people you care most about are protected from the consequences of these eventualities. To give an example, life insurance packages can help a person guarantee that their family will not experience financial hardships in the event of their untimely death (and the ensuing loss of a monthly income).
WHAT CAN YOU PROTECT USING INSURANCE POLICIES?
- Your Family:
A life insurance policy protects family members from the loss of income after a death. Another type of insurance that can protect a family is a policy that ensures debt repayment after death; this can help to ensure that a family is not left in financial difficulties after a death.
- Your Home:
A house insurance can protect your home against theft, fires, natural disasters such as floods, etc. If you are a landlord, a landlord insurance policy will help you protect your house against potential damages done by the tenants.
- Your Vehicle/Motorcycle:
Car insurance and/or motorcycle insurance policies can help you make sure that you are not left with a huge loss after a theft, and that you do not incur significant losses after an accident that has damaged the car/bike.
- Your Pets:
Because veterinary treatment often does not come cheap, many pet owners have opted for pet insurance in order to guarantee their pets can have access to medical care.
- Your Phone:
Mobile phone insurance packages can help you cover the costs of lost, damaged or stolen phones.
- Your Business:
There are various types of insurance policies that can be beneficial to business owners. Some policies can cover the business losses and help business owners avoid losing out on costly investments, etc.
- Your Health:
Medical/health insurance and travel/holiday insurance policies can help you guarantee that you will be able to receive potentially costly medical care even when you do not have the finances ready at hand as soon as you need them.
For a more comprehensive list of all the different types of insurance policies, visit the Association of British Insurers’ website:
UNDERSTANDING THE TERMINOLOGY
Often, insurance companies use technical jargon that most laypeople may not be familiar with or understand. In order to make sure you’re not taken advantage of by a company and are aware of all the proceedings, what they mean, and most importantly, to understand everything in your insurance contract, it may be beneficial to take a moment to acquaint yourself with the technical jargon that is often used in these settings.
Some of the most used terms are:
- Out-of-pocket Costs: The costs that your insurance package does not cover.
- A Deductible: This is the specified amount that a loss must exceed before you can claim it from your insurance company.
- Insurable Interest: In order for an insurance contract to be valid, there must be insurable interest (the insurer should be able to prove that the loss that could be incurred could have a significant economic/financial impact on him/her).
For a more comprehensive list of the technical jargon used in the insurance industry, you can visit this page:
CHOOSING THE BEST POLICY
Although this not an exact science, there are a couple of points worth considering in order to choose the most appropriate insurance package to suit your exact purposes and needs. Here are a few of the most important points:
- Compare different insurance companies/policies: Don’t go for the first insurance policy you’re offered, or one that all your family and friends say is great – remember, there is no one-size-fits-all insurance plan, everyone’s requirements, situations and lifestyles are different.
- Different plans have different networks: If you already have a couple of favourite doctors (or any other professionals), you may want to make sure your insurance package covers their specific services so you’re not forced to start out with new specialists and professionals.
- Calculate the costs: Before choosing a package, think about your average monthly expenses on things like medical care, car-related expenses, etc. Even though cheaper lower premium policies may seem attractive at first, they may result in significantly higher out-of-pocket-costs (costs that are not covered by the package) and could end up more expensive in the long run! It all depends on your own individual lifestyle and spending patterns.
- Ask all the right questions: During your insurance consultations, make sure you ask everything you need to know about. Don’t worry about seeming silly – getting the most appropriate insurance package is important, you want to make sure you get it right!
For more useful tips for choosing the most suitable insurance packages, visit the following links:
DO YOU NEED AN INSURANCE BROKER?
Some people have pretty straightforward needs and find the perfect insurance package relatively quickly. Others, have a more difficult time, especially if their needs and requirements are more complex. If you feel absolutely lost in the dark about the different insurance packages and you are in need of professional, unbiased advice, an insurance broker may help to clear up all the confusion for you. Insurance brokers work in the best interests of their clients and ensure that the best deals are reached.
For more information about insurance brokers, the British Insurance Brokers’ Association’s website is a convenient place to find out all you need to know about insurance brokers in the U.K.
Now that you’re more familiar with insurance in general, have a look around this site for more detailed information on more specific aspects of the insurance industry.