Eastbourne Citizens Advice Bureau

1
Eastbourne Citizens Advice Bureau Financial
Literacy
INSURANCE
sponsored by
2
If you lost something or it was stolen could you
afford to replace it?
If your flat caught fire and everything was
destroyed could you afford to start again?
If you crashed your car into someone elses how
would you pay for the damage?
3
Insurance is a way to protect things against
damage or loss. You pay an amount which gives you
an amount of protection in return according to
your policy. If the worse should happen and
something is damaged you make a claim to the
insurance company who will pay you.You can
insure many things for varying circumstances.
This unit covers the main uses of insurance.
4
Home Contents You can insure the contents of your
home against fire, theft or accidental damage.
Most policies give you cover up to a maximum
amount such as 30,000. You may insure specific
items which are worth more. Some policies give
you cover for your possessions when you take them
out of your home. This is useful for items like
mobile phones, cameras, laptop computers etc in
case they are lost, stolen or damaged. You can
also get cover for damage caused by accidents.
5
Buildings Insurance For most of us a home is the
most expensive thing we will ever buy. How would
you replace or repair a house if it were damaged
by serious accident, like flooding, car crash or
lightning strike? Buildings Insurance covers you
against these types of hazard. Most mortgage
lenders will expect you to take out some kind of
buildings insurance to pay for major
repairs. Buildings insurance does not cover your
personal possessions thats covered by Home
contents insurance.
6
Vehicle Insurance Cars, vans and motorcycles are
all expensive items and as well as being costly,
accidents can cause serious injury. The law
requires that any vehicle owner has insurance to
cover against accident damage to other people,
known as Third party. That means that if you
hit someone elses vehicle your insurance company
pay for their repairs. The insurance company can
also pay out compensation for injury.
7
Third party, fire and theft gives insurance
cover against accidents and injury to other
people and also pays out in the event that your
vehicle is stolen or damaged by fire. Fully
Comprehensive insurance gives cover to third
parties and also damage to your vehicle by
whatever cause. Insurance policies vary so always
check the details of your policy.
8
Excess Many insurance policies require that when
you make a claim you must pay an amount e.g. 50.
This amount is known as the excess. Check your
policy for details of any excess.
9
No Claims Bonus Many insurance offer you a
discount if you do not make a claim. This means
that if you do not make a claim on your insurance
during the past year, the amount you pay for
insurance cover (known as the premium) for the
next year is reduced. Some insurance policies
allow you to make a claim without losing your no
claims bonus. This is called a protected no
claims bonus. You will usually have to pay a
higher premium for this. If you decide to change
your insurance to another company you can usually
take the no claims bonus with you.
10
Policy Your insurance policy is a contract which
sets out the details of the cover you are paying
for. It should explain in detail what is covered
and what is not covered as well as how to make a
claim. You will usually be sent a printed copy
of your insurance policy through the post but now
that many insurance companies operate through
websites you can also read the policy online. It
is worth having a look at the policy before you
accept it, so that you fully understand the
conditions.
11
Life Insurance Who would provide for your family
in the event of your death? This may seem like a
morbid question but if you are a financial
provider for your partner and children, you may
be concerned about their welfare if you were to
die suddenly. Life Insurance (sometimes called
Life Assurance) pays out in the event of your
death. Some policies pay out an amount on a set
date which is known as the when the policy
matures. There are a large variety of policies
available each with different conditions.
12

• Holiday Travel Insurance
• You can take out insurance to cover possible
  difficulties while travelling or on holiday. You
  can book this when you arrange a holiday or
  separately. You could also have annual policy
  which covers any travel.
• Travel Insurance covers things like
• Medical expenses
• Injury or death
• Lost, Stolen or Damaged Property
• Delays, cancellation and missed travel
  arrangements.
• Some policies will not cover certain things like
  dangerous activities so it is worth checking
  when you buy travel insurance.

13
Health Insurance In the UK we do not have to pay
for medical treatment provided by the National
Health Service. This is because the NHS is paid
for by our National Insurance contributions,
deducted from our wages. This means we do not
have to worry about the cost of the treatment
which in reality can add up to thousands of
pounds. You can also take out additional private
Health Insurance which gives you access to
treatment by private doctors or dentists. These
can sometimes give you access to treatment sooner
than the NHS. There are several companies who
offer private health insurance in the UK and some
have their own private hospitals or treatment
centres.
14

• Critical Illness Insurance
• Critical illness insurance provides you with a
  lump sum of money if you are diagnosed with
  certain illnesses or disabilities such as a heart
  attack, stroke, loss of arms or legs, or diseases
  like cancer, multiple sclerosis or Parkinsons
  disease.
• If being ill has left you out of pocket, it can
  be really handy to have a large sum of money to
  spend on things like everyday expenses, paying
  off your mortgage or your medical expenses. You
  can use the money in any way you like, you dont
  have to spend it on anything in particular.
• The costs of critical Illness insurance can be
  quite high and you may never need to use it. You
  wont get any money back if you never make a
  claim. So before you think about taking out
  critical illness insurance, consider -
• whether you already have some illness insurance
  combined with another insurance policy like a
  life insurance policy.
• what benefits your employer pays out if you
  cant work because of ill-health or
  disability
• whether you have savings you can use instead of
  insurance.

15
Payment Protection Insurance When you borrow
money you can take out optional insurance in case
you become unable to make the agreed repayments.
This could be for reasons like redundancy, loss
of work, illness or accident. If you have to
make a claim the insurance will pay a minimal
amount towards the cost of your repayments.
Check the details of the policy to find out when
it will pay out. PPI can be very expensive and it
may not be suitable for you or you may have other
ways to cover the repayments if you need to, so
stop and think about whether you really need it
before you agree to take it out. Always check the
terms and conditions of the policy very
carefully. There will often be lots of
exclusions, which means there may be lots of
circumstances where you won't be covered if you
want to make a claim
16
Pets Insurance If your pet becomes ill,
veterinary treatment can be expensive. You can
take out a pet insurance policy to cover the
costs of vets bills.
17
Complaints If for any reason you are dissatisfied
with the service you receive from an insurer you
should complain to them directly. Your policy may
have details of a complaints procedure. If you
want to take the complaint further you can
contact the Financial Services Authority at
http//www.fsa.gov.uk/ Or contact the
Financial Ombudsman Service atwww.financial-ombud
sman.org.uk Or visit your local Citizens Advice
Bureau