In our latest article, we go back to basics to demystify the world of insurance for you. Read on to find out how the system works, what you can actually insure and what the main types of insurance are.
It’s an odd thing taking out insurance. We happily part with our cash in return for the right to claim compensation for a hypothetical future event that, in actual fact, we hope never happens. We pay for a safety net that we hope we never have to use. But why?
No matter how carefully we live our lives, we never know exactly what’s around the corner. And while some unforeseen events may be positive, others could have more dire consequences, including for our finances. So what can we do to keep risks to a minimum? Firstly simple things like fastening your seatbelt, wearing warm clothes in winter, eating a balanced diet and always putting money aside for a rainy day will give you some peace of mind. For everything else out of our control, there’s insurance. Difficult events will still crop up, but the right insurance policies can significantly soften the blow.
An insurance policy covers you against the financial consequences of an unforeseen event (a risk).
An insurance policy covers you against the financial consequences of an unforeseen event (a risk). Insurance is based on the principle that all members are reciprocally responsible for everyone else’s risks. The contributions paid by all members provide compensation for any member dealing with an unfortunate incident. In other words, we pay money (our “premiums”) today to support other members, knowing that they do the same in case the same happens to us.
Insurance works in that your insurance company accepts the cost of a potential loss in exchange for a premium that you pay in line with the terms and conditions of the agreement. The amount of this premium is basically determined by things like the type of risks insured, the desired level of protection and the term of the policy.
New risks – whether actual or perceived – are constantly being identified, so the list of things that can be insured is never-ending. The actress Julia Roberts insured her smile for $30 million. Pianists can insure their hands. And some US companies even offer insurance against alien abduction…
Back on Earth, though, the most common policies taken out include home insurance, car insurance, third-party liability insurance, health insurance, life insurance and other general policies for everyday life. Let’s have a brief look at a few of them.
Your home and its contents are incredibly valuable, so it makes sense to protect them against various risks. There are many types of home insurance available, such as:
There are also policies for your garden furniture, or to cover you from graffiti damage, vandalism, terrorism, and more.
You must insure your vehicle since by law you are liable to pay for any injuries your vehicle causes other people.
Your car is a valuable possession, but it’s not just an asset that you can decide to insure to whatever level you like. You must insure your vehicle since by law you are liable to pay for any injuries it causes other people. There are various policies available for your vehicle, including:
As we mentioned above, you can insure almost anything, but here a few of the most relevant policies:
If you’d like any more information, please get in touch with your insurance agent or broker. They’re on hand to explain things clearly and get you the right level of cover.
Sustainable development issues have been a key concern in recent years, and businesses have a…
When it comes to investing, it’s advisable to take the long view and to follow…
Have you ever been to a meeting that seems to drag on with no meaningful…
In a hyperconnected world that constantly demands our attention through messages, notifications and alerts, it’s…
What distinguishes a manager from a leader? What are the rules of leadership, what mistakes…
Just launched a new product or service, or created an online store? Want to stand…