1. Life Insurance
The idea behind UK life insurance is to protect you and your family should anything happen to you. In short, what you are trying to insure is not your ‘life’ itself, but more the continuation of your lifestyle should anything happen. Here, in return for making periodic (usually monthly) premiums to the UK insurance agent, you will be provided with an agreed to lump-sum if you should die during the period of the policy. Now, obviously with you dead you yourself are not going to benefit too much from your life insurance policy, so the issues that you need to consider before taking out any life insurance include:
- will the life insurance policy cover all my debts?
- will the life insurance policy cover my funeral expenses?
- will the life insurance policy provide my family with sufficient lump-sum payment in order to allow them to continue to live in the manner to which they have become accustomed?
Importantly, when considering the above questions, you not only need to think of your family’s needs today, but also during the entire term of the insurance policy. In other words, has inflation been factored in? Keep in mind that if you insure your life for what you think you are worth today, it is highly likely your family will need to economize should anything happen to you tomorrow!
2. Motor Insurance
If you own a vehicle in the UK, the UK motor insurance is not an option, but a legal requirement (at minimum, third party motor insurance is required if you want to drive your vehicle on the roads in the UK). The only question that remains is whether you select to have fully comprehensive motor insurance, third party fire and theft, or straight third party only motor insurance.
- Fully comprehensive motor insurance: UK insurance agents provide fully comprehensive insurance to those who wish to insure their car against any event – whether you are to blame or not. Now, it is a common misconception that most people in the UK insure their cars’ with fully comprehensive insurance. the fact is, if you buy a car on hire-purchase or some other form of financing, it will likely be a contractual requirement placed on you by your lender that you have fully comprehensive car insurance so that they can rest assured knowing that you have the means to repay them should anything happen to the vehicle. As most people in the UK have cars which are subject to financing, most people in the UK have fully compressive motor insurance!
- Third party fire and theft: third party fire and theft motor insurance will insure you against any accident you have with a third party (but will not include any damage done to your car, only theirs) where you are to blame, or where your vehicle is stolen or catches fire. In most cases UK insurance agents will only cover the insurance to the value of the vehicle – not to the value of a replacement cost.
- Third party is the cheapest form of motor insurance and will only cover repairs to another vehicle that is damaged as a result of an accident you are found to be at fault for.
Keep in mind that all of the above motor insurance policies can be voided if you drive in a certain manner, for example drunk driving, so please make sure you read the insurance policy carefully to see what circumstances or events may cause you to void the motor insurance policy.
3. Home/Mortgage
Basically UK insurance companies offer two types of home insurance: home structure and land insurance, and home contents insurance.
- Home structure and land insurance: As the name suggest, home structure and land insurance is taken out to insure against any damage to your land or the structures on it – such as your roof being blown off during a storm! If you have mortgaged your home, then it is extremely likely that your mortgage lender is going to have insisted that you take our home structure and land insurance – so as to protect the value of your home. This way they’ll know that you’ll not be faced with any negative equity in your home should there be an unfortunate event such as a flood or mudslide.
- Home contents insurance: Again, as its name suggests, home contents insurance insures the contents of your home – usually against theft, but other circumstance can also be insured against – depending on the nature of your UK insurance policy. Having that this, home contents insurance does not insure the structure of your home, which is done with a home structure insurance, not, in most cases, does it insure any fixtures to the structure of your home. It is simply a means of insuring the contents of your home against any unforeseen event; such as a burglary. If you are considering taking out a home contents insurance policy, keep in mind that the policy will only insure the value of the goods lost, not the replacement value of the goods lost. So, for example, if you have nice sentimental value items in your home, the UK insurance agent will not consider this as an additional value in the item, but rather will look to see what the replacement of such item would cost in the shops.
