What is Insurance
Insurance helps you protect yourself against risks like a house fire,
car accident or burglary. You can also get insurance that pays you
money if you get too ill to work or to provide for your family if you
die. funds before approaching the bank.
How insurance works
With insurance, you choose what you want to be protected against.
Then your insurer calculates the risk that the events to be insured
will happen and the insurance provider or insurer will determine the
price you will need to pay (your premium).
These are the three main steps:
- Choose a policy. An insurance policy is a document that lists
exactly what you are or aren’t protected against. For example, a travel
insurance policy might say that it’ll cover your medical bills if you
injure yourself abroad – but not if you were doing something dangerous,
- Pay the premium. The premium is the amount you pay
each month or year (or sometimes just once) to have the insurance. The
amount you pay depends on the risk and on the value of the events
you’re insuring. For example, if you’re an inexperienced driver it’s
more likely that you’ll have an accident, so your car insurance will
cost more – and it’ll be even more if you drive an expensive car,
because repairs will probably cost more.
- Make a
claim. If something happens that’s covered by the policy, you can claim
on your insurance. You tell the insurance company what happened, they
check that it’s covered under your policy, and if the claim meets with
what you’re protected against then they pay you as agreed
Do you need insurance?
There are lots of different types of insurance – you can cover almost
anything, from your wedding to your pets.
Some insurance is
compulsory – you can’t drive a car without at least basic car
insurance, and you can’t get a mortgage on your house without buildings
After compulsory insurances, the most important thing is
to protect yourself and your family.
The types of insurance that you
need will depend on what you need to protect.
Ask yourself what’s important to you:
⦁ If you’re travelling abroad, get travel insurance to help pay
your hospital fees and other expenses if you get injured or sick.
If you have kids, what would happen to them if you died unexpectedly?
Life insurance would help make sure they’re looked after financially.
⦁ If you have a big mortgage, what would
happen if you became too ill to work? Income protection insurance could
help cover your payments.
Think it over and look at prices –
then you can start to decide what you want and what you can afford.