How the meaning of insurance has changed forever

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Over the years, the reason insurance all started has lost its way.

Insurance is meant to be a way of protecting against events which you are not prepared to risk happening in any circumstance, not events which you simply wouldn’t fancy happening.

For most people, examples of things that would be a financial disaster for them are their house burning down, losing their job, being off work sick and not being paid, or the death of a bread-winning partner.

If one of these things happened and you didn’t have the correct insurance in place, you would be in trouble.

Despite this, there are millions of people in the UK gambling with their lives by not taking out the proper insurances to protect themselves.

The strange thing is, some of these people do have insurance, but for things which really aren’t all that important, like their mobile phone, television and laptop.

You can even take out an extended warranty for a £15 kettle, which for some may sound like a must-buy when you’re asked if you want it in the shop, but shouldn’t be at the top of your priority list, above life cover.

What we all need to realise is what is most important for us to protect. It isn’t our car, laptop, phone, or even our kettle, it is ourselves and our families, and the money which supports our standard of living.

We can sometimes get mixed up with what matters, because it is easier to imagine something going wrong with a tangible object, but just because it’s harder to picture the devastating effects that the loss of income can have, doesn’t mean it’s any less real.

It is worthwhile listing the things you can insure against, then putting them in order which is most important to you, and then compare that to what you have actually got.

Sometimes the policies we take out aren’t a necessity, and represent poor value for money. I was recently offered a two-year accidental damage insurance policy when I got my TV. The TV was £550 and the policy cost around £150, so for it to be fair value, I need to have more than a one in four chance of breaking it.

Although you can feel put on the spot at the time, and you can sometimes buy things like this on an impulse, you need to remember three things.

You have up to 14 days to cancel the policy after you have bought it if you change your mind when you get home.

Your home insurance policy may already cover you for this risk. You can take out an extended warranty with an independent company, which can sometimes cost around half the price, so it is well worthwhile looking into this before you commit.

The same goes with life cover, whereby you shouldn’t feel like you need to buy cover there and then from your bank.

You have every right to cancel your policy within 14 days of it starting without charge, or any time after that and you are free to look for independent cover, which again can be at around half the price.

Kieron Bassett Financial Services has two Independent Financial Advisers who specialise in insurance and mortgages. Contact us on 01524 832057, via e-mail, info@kieronbassett.com, or visit www.kieronbassett.com.