Unexpected and unpleasant events in life we often cannot avoid, but we can predict them and insure ourselves against them. In this unit you will find out what can be insured, how to do it and if you really need insurance.
Because the unexpected always lurks around the corner! If you’re burgled, insurance can pay for the stolen things. If you need medical treatment, it can pay for private healthcare, and even replace some of your income if you can’t work. If you die, it pays out a lump sum to the family you leave behind.
Insurance is a way of protection of you and your belongings against a calamity (e.g. burglary, illness…). In such cases, insurance will pay out an agreed amount, or an amount to cover the damage. Of course, it may not happen, but you have to decide whether you will or can take that risk. Some insurance, like motor insurance, is compulsory – you have to have it if you drive.
The amount you pay for insurance is based on the information you give the insurance company (the underwriter) and the type of risk you want to insure. Insurance companies use underwriting criteria (e.g. where you live, type of insurance etc.) to help them work out the price (premium) of the insurance. The insurance company agrees to pay out if the event which you’re insuring against happens. You pay either a sum for the whole year (or longer) – single premium, or a regular premium, usually monthly, into the policy.
