Exploring The Different Types Of Insurance

*This is a collaborative post on the different types of insurance but all words and thoughts are my own

Insurance protects people and things against the financial cost of something going wrong. And there are a lot of different types of insurance out there.

You can’t stop bad things from happening, but if something does happen like a car accident, your pet gets sick or your laptop smashes if you’re protected it means you won’t have to pay out the full financial cost on your own.

Insurance can sometimes feel like a waste of money when you’re constantly paying out and not needing it. But that’s a great position to be in. And some insurance is compulsory like vehicle insurance, or buildings insurance. But others are up to you to decide on. Weigh up the risks. Could you afford to pay if your pet got sick or you needed medical treatment when you’re abroad?

Here’s a breakdown of the main different types of insurance covers out there.

Types of insurance- Life insurance

Let’s get the most morbid of the types of insurance out of the way first; life insurance. This is protection for you or your family if you get seriously ill or die. If someone in your household dies it can have a huge financial impact on your life. And you’ll be dealing with enough without having to worry about how you’ll live. Life insurance can give you peace of mind if something does happen you’ll be provided for.

There are 3 main types of life insurance policies:

• Life cover- this will provide a lump sum to your dependants if you die. You can choose to have a decreasing amount over time to cover the mortgage (if you own a house), or you can choose a set amount.
• Critical illness- if you’re unable to work for medical reasons such as cancer or a stroke this will provide you with a lump sum to live off.
• Income protection– if you’re unable to work due to illness or disability this will provide you with a regular payment.

If you’ve got anyone who depends on your income then it’s worth looking into. And if you take it out when you’re young and healthy you can generally get good cover for a low cost. If you take it out when you’re older than it might cost more as you’re likely to have more health issues.

Household insurance

If you own your own home chances are you’ll need to have buildings insurance as a condition of your mortgage. This would cover the cost of repairing or rebuilding your home if it’s damaged by fire, floods, storm etc. But this only protects the shell of your house and not the stuff inside your home.

Both homeowners and renters can take out contents insurance. This means your possessions are covered in case they’re stolen, lost or damaged.

The two types of household insurance work hand-in-hand. For example if there was a fire and your house burnt down household insurance would cover rebuilding/ repairing your home. And contents insurance would cover the cost of replacing your belongings. Many insurers will offer discounts if you combine the two policies with one insurer.

You can also get appliance insurance for most kitchen appliances like your fridge or washing machine. You’ll pay out a small amount each month and then if/ when the item breaks you’ll be covered for repairs or a replacement.

Types of insurance- Pet

Pets become part of the family very quickly and if your pet gets injured or ill the bills can pile up. So while pet insurance is optional it’s worth it as you’ll never have to worry about the costs of care. You can choose a level of cover which provides lifelong care if your pet develops a condition such as diabetes.

And much like life insurance if your pet is young and healthy you may be able to get a very good deal on insurance. But if you take the policy out later in life it may be more expensive.

Vehicle insurance

For most of us, vehicle insurance is the first type of insurance we’ll buy in our lives. This is because you are legally required to have vehicle insurance whether you drive a car, van, or motorbike. Vehicle insurance covers if you are involved in an accident. Some people even have to purchase motor trade insurance to cover themselves in their trade. Having the correct insurance when working with vehicles is very important.

The minimum cover is third-party which covers any damage to another person’s car or property. But if you had an accident it wouldn’t cover any damage on your car. For most of us who use our car on any regularity full comp insurance is the better offer. This covers both the other vehicle and yours if you’re involved in an accident. With your vehicle insurance, you’ll also have options to add in things like motor legal insurance, breakdown cover, key cover, and more.

However, it’s important to understand that this does not include a car accident lawyer if you are involved in a crash, or any type of incident. If this is something that you did not already know, then you need to make sure you’re reading your policy carefully to fully grasp what is and is not covered by your insurance. Different types of insurance offer different policy features, so ensure that you are well versed in yours just to be on the safe side.

Types of insurance- Travel

You can buy travel insurance for individual trips or as an annual policy if you travel often. Travel insurance can cover a whole lot of instances including if your luggage is lost and insurance will pay out to replace the items lost. It can also cover cancellation or illness before you’re due to travel (particularly handy with COVID!) And travel insurance can also cover any medical expenses if you’re ill or hurt yourself when you’re abroad.

It’s worth looking into all the types of insurance for travel as each one will be quite different. Since the outbreak of coronavirus a lot of policies don’t cover cancellations due to the pandemic. And some policies over varying levels of cover for medical bills as well.