5 Types Of Insurance Everyone Needs

1. Life Insurance

The Low-Down:

Life insurance is the answer to a question you might not yet be asking yourself: how will my spouse or partner, children or relatives, manage financially if I die or become seriously unwell unexpectedly? In this case, your life insurance will pay your dependents, either as a lump sum or regular payments. It’s designed to give you peace of mind that your loved ones will be looked after if you’re no longer there to help provide for them.

The Facts:

One of the common misconceptions about life insurance is that it’s just for older people. Life insurance is available for anyone between the ages of 18 to 75, and it’s actually better to invest in life insurance at a younger age as it may reduce your premium. Health plays a big part in the cost of a premium. For example, due to the stigma of smokers dying younger, insurance companies consider smokers a high risk. This can lead to them being charged on average 100% more on a policy.

The Types of Cover:

Level Term cover pays out a set lump sum in the event of an individual passing away and is generally taken out to protect an individual’s family in the event of their passing.
 
Another type is Serious Illness Cover, which is often confused with health insurance. Serious Illness Cover pays out a set lump sum in the event of the person being diagnosed with a particular illness covered on the policy, such as cancer or a heart attack.
 
Income protection is another level of cover that is often confused with health insurance. However, this cover is designed to replace an individual’s salary in the event of them being incapacitated and unable to work for a prolonged period of time. This one is great for when you buy a new home.

The Legalities:

It’s not necessarily something you legally need, but if you buy a house, usually a bank will require Mortgage Protection Cover and one type of life insurance to secure a mortgage before drawdown. It’s designed to pay off your mortgage should you pass away during the mortgage repayment term.

The Cost:

The cost of each varies. It depends on the level of cover you buy, and the variables, such as smoking and your health at the time of purchase. It pays out a lump sum if you die or become sick during the term of the policy, but once agreed the premium is guaranteed and will stay the same for the duration of the policy.

2. Home Insurance

The Low-Down:

Depending on what insurance you go for, home insurance will cover any damage done to your property and the contents within it, whether from theft, flooding or some other misfortune. Some people may believe that because of the structure of their home or the area they live in, that they will be safe from any risks of their property being damaged or robbed. However, accidents do occur and, more often than not, homeowners find themselves out of pocket because they either didn’t have any type of home insurance or they were not aware of the various covers they are entitled to. For example, when we think of home insurance we automatically think of the actual structure of the building. But home insurance can be broken down into various different policies that ensure you’re not left out of pocket.

The Facts:

Contents insurance will primarily cover you for damage to the contents of your home by a number of different events including fire damage, water damage, theft and accidental damage. Whether it’s your wedding ring or your brand-new flat screen TV, this insurance makes sure you’re covered in the event of an accident.

Buildings insurance is extremely important for home owners. Buildings insurance refers to the structure of your home such as the walls, roof and floors. Most policies will cover the cost of repairing or rebuilding your home in the event of it being damaged from vandalism, fire, explosions (like a gas leak), bursting or freezing of the plumbing, and plenty more.

The Types Of Cover:

In most cases, you will need home insurance, but there are different levels of cover available. For instance, if you're living in a rented or shared property, then tenant’s insurance offers protection for possessions that get stolen or damaged while you are living in a rented property. When you buy a property it’s also important to take out content and buildings insurance to protect your home against the unexpected. Even if you buy a leasehold property, you may need to insure parts of the building you’re legally responsible for.

The Legalities:

While it’s not a legal obligation to insure your home with building insurance, some mortgage lenders insist that you hold appropriate insurance to cover the cost of damage to the structure of your home.

The Cost:

This depends on the price of your property and the contents within it. It’s important to estimate the value of the contents within your home accurately. Although you want to protect yourself from anything that could possibly happen to your home, it is important not to overestimate the value of your contents. You will only be compensated for the replacement cost of the items you insure, so if you are to overstate the value of your contents, it will result in you paying a higher premium.

3. Car Insurance

The Low-Down:

Car insurance is a legal requirement if you want to drive your vehicle in a public place. Failing to have car insurance could result in a fine, penalty points and may even see you disqualified from driving.

The Facts:

You need to have insurance as soon as your start driving a car.

The Types Of Cover:

You have three choices of car insurance cover to choose from. Third party cover is the minimum amount most insurers will offer and provides the minimum cover you are required to have by law. It pays out for any claims others have against you for any damage or injury caused by your driving.
 
Third party, fire and theft cover provide the same cover but also allows you to also claim for any loss or damage as a result of fire and theft. Comprehensive cover covers all of the above, as well as allowing you to claim for damage to the vehicle no matter who is to blame. There are additional benefits that you can add to this policy which can vary between insurers, such as breakdown assist, windscreen cover and personal affects.

The Legalities:

Yes. However, even though car insurance is a legal requirement, people still do drive without it. This means that if you were involved in an accident and at fault, you would be liable for any injuries occurred to both the other party and yourself, leaving you out of pocket. With fully comprehensive cover in place, you can protect yourself in the event of a claim.

The Cost:

It can be, but there are ways to keep the cost down. The easiest way to get a lower car insurance quote is to buy a safe and reliable car. You may want to buy your dream car but in reality, it’ll likely require more expensive insurance than a car with less risk and a higher safety rating. To save even more money, don’t go for the latest model. A car that is a few years old will be cheaper to buy in the first place and brand-new cars can often be much more expensive to insure than older models. However, keeping the car under ten years old is advised also as this will help to bring the price of your insurance down. A car that is older than ten years may result in a higher insurance premium. Your age and how long you’ve been driving will change how expensive your premiums are. When you’ve been driving for a longer period of time you can get a better no claims bonus. (A reduction in the premium charged for insurance when no claim has been made during an agreed preceding period.)
 

4. Travel Insurance

The Low-Down:

It may sound obvious, but you’ll be surprised how many people forget to take out travel insurance. If something unexpected happens while you’re on holiday, travel insurance cover will protect you from any costs and medical bills. If you or someone you’re with becomes ill or injured during your holiday, emergency medical treatment can be expensive when you’re abroad – standard travel insurance will help with this.

The Facts:

Any holiday you go on abroad, you will need travel insurance. Even in Europe, where you have an European Health Insurance Card (EHIC), it is wise to take out insurance, as the Foreign and Commonwealth Office have stated the EHIC is “not an alternative to travel insurance”. (It’s important to note the future for EHIC cards in the wake of Brexit is currently uncertain, and their validity will depend on the type of deal we get.)

The Types Of Cover:

The cover available is Single, Multi-Trip and Extended Stay. Single-trip covers one-off getaways; Multi-Trip caters for those who are away more than once a year; and Extended Stay is aimed at people who will be away for between three and 12 months.
 
Aside from medical cover while travelling, your travel insurance also offers protection in case your luggage or personal belongings are lost or stolen. Some travel insurance policies can also cover trip cancellation, personal liability cover, emergency dental treatment and finally funeral expenses in the event that it might be needed.

To help you narrow down your options when it comes to cover, ask yourself the following questions: Where exactly are you going? Are you planning any adventurous activities? And do you have any pre-existing medical conditions?” these will help you decide what level of cover to get.

The Legalities:

It’s not a legal requirement, but in order to make sure that your dream holiday doesn't turn into a nightmare, we recommend that you take out travel insurance.

The Cost:

The cost of travel insurance will vary according to a number of factors, such as where you’re going, how long you’re away, and any extra cover you’ll need. Your age will also be taken into consideration – according to MoneySupermarket, travel insurance is generally cheaper for under-25s, and then rises slightly after that. Once you reach your 60s, it will be around 62% more expensive. Plus, any pre-existing medical conditions are likely to send the price up, depending on what they are.
 
To find out more, visit Chill.ie

5. Private Health Insurance

Why do you need it?

If you are able to afford to take out Private Health Insurance or are provided it through work, it can be a helpful source of protection. According to CompareTheMarket, private health insurance is a product that helps to cover your healthcare costs. Depending on the type of cover you take, it can help pay for treatment as a private patient in a hospital or outside of hospitals.

When do you need it?

As most UK residents are entitled to free healthcare on the NHS, it’s not something you necessarily need at any point in your life, but it provides you with a certain element of comfort. The Money Advice Service categorise its purpose as something to have if you’d prefer not to wait for NHS treatment, or want to be covered for certain drugs and treatments that you can’t get on the NHS (for example, specialist surgery for sports related injuries might be included in the cover), then this would help.

Are there different types and what do they cover?

Like all other types of insurance, the cover you get from private health insurance depends on the kind of policy you buy. Basic private medical insurance picks up the costs of most in-patient treatments, like tests and surgery. Some insurance may extend to out-patient treatments, which covers specialists and consultants.
 
Which? also note that there are ‘fully underwritten or moratorium policies’: “If you choose a fully underwritten private health insurance, you will have to give your provider your full medical history. With a moratorium plan, you will only need to give limited information to your insurer. A fully underwritten policy is likely to give you wider coverage, but will be more expensive. A moratorium policy will be cheaper and will come with blanket exclusions on some pre-existing conditions.”
 
However, most private health insurance will not cover the following:
 
-Organ transplants
-Pre-existing medical conditions
-Normal pregnancy and childbirth costs
-Cosmetic surgery to improve your appearance
-Injuries relating to dangerous sports or arising from war or war-like hostilities
-Chronic illnesses such as HIV/AIDs-related illnesses, diabetes, epilepsy, hypertension and related illnesses

Is it a legal requirement? 

No. To most, private health insurance is a luxury. Whether you choose to take out a policy is entirely your choice. 

What affects the cost of your insurance?

According to Money Saving Expert, some insurers will charge less if you can prove you can stay in good health with regular exercise and healthy eating. Being a smoker will significantly raise the price of your premiums. But the premiums will rise every year regardless, so it’s not going to be a cheap policy to take out.

Is it expensive?

According to The Money Advice Service, a typical family premium (two adults in their 40s and two children under 10) can vary from £700 to £1,800 per year. Premiums rise every year and with age – so by the time you’re older, and more likely to need hospital treatment, you might not be able to afford it.