Insurance Jargon

Insurance involves paying a sum of money (called a premium) to protect yourself against a loss resulting from certain negative life events which are specified in a contract known as the insurance policy.

How do I know if I need to buy Insurance?

Some types of insurance you have to buy. i.e. car insurance if you drive a car.

However, when considering whether to buy other types of Insurance, ask yourself the following questions:

  1. What are my life circumstances?
    i.e. Do I own certain possessions, do I have a partner or children, am I employed, am I at risk of becoming ill, do I have a pet, do I travel, do I have any credit debts outstanding, etc?
  2. What negative life events may I encounter that would affect the life circumstances I listed in answer to question 1?
  3. What would be the financial impact of these life events if I wasn’t covered by buying the relevant insurance?
  4. If I didn’t have insurance, could I cover the cost of this myself through any savings I have?
  5. Am I insured automatically either through employment if I become sick or via payment protection insurance if I have any credit debts?
Answering these questions will help you to assess whether or not you need to buy the insurance. For example, if you choose not to buy House Insurance, will you be able to cover the cost of replacing your possessions if they are damaged or stolen.

What do I need to think about when I'm buying insurance?

  1. Shop around for the best deal.
    Comparison website such as http://www.moneysupermarket.com/ and http://www.moneysavingexpert.com/insurance/ and http://money.uk.msn.com/student/ can all help with this. Also, look out for various insurance leaflets in the shops, supermarkets and Post Offices. However, do make sure if you telephone them for a quote that you are happy with the deal they are offering and that you are not pressured into signing up for something you are not comfortable with. Check whether your current account with your bank offers any insurance or whether you may be covered for contents insurance on your parents house insurance if you live away from home solely during term-time.
  2. Read the Insurance Policy terms and conditions when you receive them.
    There is usually a 14 day cooling off period when you can tell them that you no longer want to take out the Insurance.

How often should I review my insurance needs and why?

Review your Insurance needs at least once a year when any policies are due to be renewed or if your life circumstances alter. i.e. you get a pet, get married, have children, rent a house, etc. Reviewing your Insurance needs is important to ensure that you don’t’ waste money on a policy that you no longer need and to ensure that you are protected by any Insurance that you do need.

What are the different types of insurance?

Buildings insurance

this applies if you own a property. It covers you for damage to the property and for theft or damage to your possessions. You usually have to take out this insurance if you have a mortgage on your property.

Contents insurance

This covers theft or damage to your possessions if you are renting a property. If you are living in University Halls, contents insurance is usually included in the rent but if you move to a private property, do make sure you take out contents insurance.

Car insurance

If you have a car, you must be insured to drive it. It is a criminal offence not to do so as car insurance covers you if you have a car accident or your car is stolen.

Health or Private Medical Insurance

This will cover you for health conditions (but usually not those you had before you took out the insurance).

Travel insurance

People usually buy this when they are going on holiday abroad to cover them if their cases are lost or stolen or something else goes wrong on the holiday. i.e. they become ill. If you are going to Europe you can get the European Health Insurance Card which will cover you for reduced or free cost medical treatment. However, you should always get Health Insurance as well. See http://www.dh.gov.uk/en/Healthcare/Healthadvicefortravellers/index.htm for further information.

Pet Insurance

This covers you if you have to pay medical bills for your pet if it becomes unwell.

Payment Protection Insurance

This will usually pay any repayments on any credit debts subject to various terms and conditions which you need to check very carefully before taking out this insurance.

Life

People with a family usually buy this to ensure that a lump sum will be paid out for a partner or children if one of the partners dies.

Critical Illness Cover/Accident, Sickness and Unemployment/Income Protection

May provide cover in the event of illness, accident or unemployment. Do read the terms and conditions carefully before taking out this insurance.

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