When Insurance is Prudent

In these cash-strapped times – insurance is prudent when it pays. Here are a few simple day-to-day household examples:

If you’re thinking of buying insurance start with the cost of the monthly premium and first calculate whether you can afford that. Take dental insurance for example. We have a cashback dental insurance policy for the family. Ask yourself how much you would normally pay per year, for say check-ups and fillings for each family member. Look at the small print in the policy you are being offered to find out which treatments are covered and which things are not insured. How much is the premium you’re being asked to pay per month? How much is it per year?

Now ask yourself whether you will save anything by taking out the policy. If the amount you would normally spend on dental care is only slightly higher than the premiums you pay then I would say it’s worth doing and prudent. You might gain some extra security as there may extra benefits written in to the policy which protect you against dental damage through an accident, for example.

If you want a general health insurance or life insurance policy and you are self-employed, or have children, there may be other advantages. For example our policies cover loss of earnings if we’re unable to work, and there was even a maternity and paternity grant given for the birth of a child which was very useful.

Each policy is different, don’t rush into it and check the small print. Insurance can be prudent as long as you do this. And while you’re there, don’t forget to keep your paperwork straight. Sounds obvious, but don’t be so wrapped up in worrying about your trip to the dentist that you forget to keep the receipt you were given to record your payment. And make sure you have claim forms to hand so that when you get home you can send the claim form off and get your refund cheque promptly! I have heard this is how insurance firms make their money. People forget to send the claim in! Be wise about health insurance too and I’m going to say this one more time. Read the policy. You might find that certain diseases (chronic diseases or cancer) are not covered at all. Also, be aware that with some policies you cannot claim until you have had the policy for a few months. Check first.

Home insurance is different of course – mortgage companies want you to have this as a form of security. Basically though similar principles can be applied. What’s the premium per month? What would it cost you to pay for damage to your home if you didn’t have the policy. Is there a no claims bonus? Can you put your lap top computer, your swish racing bicycle and the contents of your handbag on the home insurance? Will it cost extra or is it free? You might save buying a seperate travel insurance policy.

The insurance that comes with your credit card can likewise be useful. Ordering something on the internet. Paying on your credit card sometimes insures the purchase, or if you’re buying at the shops and you accidentally damage something on the way home, it often does the same job. Sometimes even includes travel insurance. Make the most of the offers you find.

Then there’s home maintenance insurance. Personally I find this both useful and prudent in a different way. I have a 24 home maintenance insurance policy which we pay monthly. This means if anything goes wrong with our appliances or heating systems (day or night) all I need to do is dial the one phone number and someone comes out and fixes it for me. Saves an enormous amount of time. And time is money isn’t it?

Choices for car insurance can vary. Third party is usually a minimum requirement depending on which country you live in, but if you use the car for work, you may feel replacement cover is the bottom line. If you use car rental companies, before paying extra for a special insurance policy for these, check your existing car insurance policy first to see if car rental use is covered.

The one type of insurance we have which is not ‘cost-effective’ is our pet insurance! Our cats are very healthy and we never need it! Still though, I’d hate to think that if one of them had an accident we’d not be in a position to help them out without digging ourselves into a hole financially. So I guess, that’s prudent.