Many of us have some form of insurance and more will have more than one type of insurance. However, insurance is expensive and you may wonder whether it is really worth it. From insuring our vehicles to lives, homes, contents, pets, health, loan repayments and individual goods we could end up with a lot of insurance. It can be expensive but not having it is risky.
Weighing up the risk
Insurance will cover us in case of certain circumstances happening. It is the law that we must have car insurance to cover the costs of car repair and injury that we may cause to other drivers but other insurance is optional. We have to decide whether we think that it is worth paying the money for peace of mind and to cover the risks or whether we will risk it and hope things are okay.
For example, we may decide that we have very few valuable possessions and so we are prepared to go without insurance on them as in the very unlikely event of them being stolen or destroyed we feel they would not be that expensive to replace. However, if we have valuable things that we would not be able to replace we might think that it is worth insuring them so that we can replace them if necessary.
Sometimes it is down to cost when more well off people might pay for health insurance because they feel they will get their treatment more quickly and in nicer surroundings whereas most people will just go along with their NHS care and hope that they will be able to get the treatment that they need when they need it.
If we have a pet we might pay for insurance so that they can get treatment if they need it as paying for operations can be extremely expensive. If we have a car we might want fully comprehensive insurance so that if it is damaged we can get it repaired without paying and we may want breakdown cover as well, just in case we need to be towed or get a repair while travelling.
Considering the cost
The cost of the insurance is a big factor for many people. There are some insurances that they may have to have, such as car insurance or life insurance with a mortgage, but usually people can choose what they have. This might mean that they will get the minimum amount of insurance cover that they can because of the cost. However, with some insurances there are factors that make it cheaper, such as having a higher excess, reducing legal cover, not having added extras and so sometimes people will opt to have more insurance but a lower level of cover.
You also have to decide whether the amount that you are paying monthly is premiums is worth it. Consider the risk that you are taking on by not having insurance and whether you feel that it is worth paying the money for. For some people they will just not be able to afford many insurances but just take the ones that they have to or feel are the most important.
You can think about whether it is better to build up some savings instead of having insurance. Instead of paying into various different insurance policies you could the money into a savings account instead. It will not add up to vast amounts, so if your car was written off or your house burned down you would not have enough money to pay for it. However, if you needed to repair a white good or replace a broken phone or pay for vet treatment for your pet, then you may have enough. It is up to you to decide on whether you feel that saving up money will give you enough to cover the costs of any potential problems you may have with that item. For example, if you need to pay £75 a year to insure your washing machine, would it be better to save that money (and more if you can afford it) so that you can afford the repair and if it does not need one you get to keep the money.
It can be a gamble and you have to ultimately make the decision. You may decide that some insurance is too important not to have but with others you can save up money instead. Of course, you have to have good self-discipline with the saving and make sure that you are committed to putting money aside each month and that you will not spend it. This can be tough for some people and they find it very hard not to spend the money. If this is the case for you then insurance might be a better option as you cannot spend it.