Insurance – how much do you need?

Insurance is a way to protect you and your family from financial loss if the unexpected happens to the things you own, your health or your ability to work.

Getting the right insurance is an important part of managing your money.

There are many different types of insurance available including car, home and contents, life, health, trauma, income protection and mortgage protection insurance.

You probably need some kind of insurance, but not everyone needs all the different kinds. How much insurance you need will depend on your own circumstances and attitudes.

It’s easy to buy too much insurance. It’s just as easy to not buy enough.

So how do you work out what insurance is right for you?

You need to weigh up the risk of not having the insurance against the costs of buying it.

Say the insurance policy for your car cost $500 a year, but if it was stolen it would cost you $10,000 to replace it. Would you have enough money to buy another car without insurance? If you did have the money (for example in a savings account), would you prefer to use it for something else?

If you can’t afford (or don’t want to afford) the risk, then you should consider getting the insurance.

Sorted's new Insurance calculator will help you get an idea of what insurance might be right for you and how much it might cost. Plus our Insurance section has information on the different types of insurance available, tips for buying insurance, and where to get professional help.

You can also order the free Sorted booklet “Insurance – Protecting what’s important to you” online or by calling 0800 SORT MONEY (0800 767 866).

Published 8 October 2009