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Why is insurance important and what can it protect?

What is insurance?

Insurance is a financial product that provides peace of mind and protection against loss, damage or theft. You can protect almost anything, but most common focus on the things and people they love. For example, you can insure your home, car and phone. You can also protect your health and can even insure your life, so your family would be looked after if something were to happen to you.

Risk vs protection

Insurance is all about managing risk. Some insurance is compulsory, for example, motor insurance for drivers. You might need other insurance as a condition of contract, like buildings insurance if you have a mortgage on your home.

Most other insurance types are a matter of choice. This means you need to prioritise what's most important, within the budget you have available.

 

Protecting the things you love:

  • Car - including accident, breakdown, gap and windscreen insurance
  • Home - including buildings, contents, valuable items and household appliance cover
  • Personal items - like your phone, tablet, jewellery, gadgets, purse or wallet
  • Travel - including holidays and flights

Protecting the people you love:

  • Health - healthcare for you and your loved ones
  • Life - providing peace of mind with a lump sum payment if you pass away, as well as helping you to leave a meaningful legacy for you and the people you care about

Protecting yourself:

  • Income and payments - including income protection, payment protection and critical illness insurance

If you're considering insurance, It may be worth looking at the things that you'd find hardest to cover yourself. For example, most people would not be able to replace all their belongings after a serious fire, or pay for medical treatment during a foreign holiday.

For other, smaller risks, you might instead just put regular savings aside in an emergency savings fund, rather than taking out insurance. We'll consider this in more detail in a future article.

Protect what's important

Check out some of our protection solutions and see which ones are right for you. Find out more.

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Financial wellbeing

While all insurance is important, some types will be more relevant to your current situation.
Insurance may protect you and your loved ones while also being a helpful saving mechanism.
When it comes to protecting your loved ones' health and financial futures, you have options.
Familiarise yourself with the terms you may come across as you explore insurance options.