What insurance do you need?

You can buy insurance to help you:

• Repair or replace your home, contents or car if they get damaged.
• Earn income if you become too ill to work.
• Provide some money for your family if you die.
• Pay off the mortgage if you die.
• Pay for medical and recovery costs if you get sick. 

You probably need some kind of insurance, but not everyone needs all the different kinds.

So when you consider getting insurance you need to weigh up the risks of not having the insurance against the costs of buying it. Ask yourself these four questions:

1. What is the risk you would be insuring against?
   This could be death, a fire in your home, or your car getting stolen. Or getting sick and not being able to work.
2. What are the chances of it occurring?
   There’s probably a small risk of a fire in your home, but it will cost a lot if it happens. The chances of your car being damaged or stolen is much higher, but the costs may not be as great as losing your home.
3. What would happen?
   If you died, your family would have to pay for funeral and legal expenses and whatever income you earned would be lost (not to mention the emotional trauma). If there was a fire in your home you could lose the house (if you own it), and all your possessions inside it?
4. How much would it cost?
   Would you have enough money saved to cover the cost and would you want to use your savings for this?  (For example, would you want to dip into your retirement savings?)

If you can’t afford, or don’t want to afford, the consequences of the risk, then you should consider getting insurance. And when you decide what risks to cover, note that the severity of the consequences is more important than the chances of an event occurring.

Insurance calculator
Work out what insurance might be right for you and how much this might cost.