Managing My Money

Week 8: Insurance - Part 1, Episode 15

Share Radio & Open University Business School

"If a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance."

Suze Orman

Welcome

to Managing My Money presented by Glen Goodman and Annie Weston

Insurance

• Protection against things going wrong
• Passes risk from you to the insurer
• Governed by a policy
• Paid for by a monthly or annual premium
• Based on 'pooling' risk with others

How different types of insurance are used

How insurance works

• By pooling the risk
• Actuaries calculate the probabilities of events
• Lots of questions on the proposal form to enable the insurer to assess the risk
• The lower the risk, the lower the premium

Use the financial planning model to:

• Assess: how much what you want to cover is worth to you
• Decide: shop around, think about exclusions, use a broker or financial advisor
• Act: complete the proposal, and start the policy
• Review: check things are still covered, avoid inertia and double insuring

Martin Upton discusses some strategies for reducing your insurance premiums: 

• Use the 'excess' to self-insure some of the risk
• Only insure buildings you own
• Live in a lower burglary area
• Smokers pay more

Car insurance

• Three types:
  • Third Party (compulsory)
  • 3rd Party, Fire & Theft
  • Comprehensive
• Premiums vary widely: shop around
• Drive carefully to maintain your no claims discount
• Gender discrimination is no longer allowed (EU law) - it used to offer women lower premiums

Other Insurance

• Travel: in the European Union you also are covered by EHIC (EU Health Insurance Card)
• Extended warranties: do you really need them?
• Payment protection insurance: large mis-selling scandal
• Life insurance: term, open-ended (whole life), endowment (investment element)
• Private health insurance
• Critical illness cover 

And don't forget:

That in the United Kingdom there's always a safety net in the welfare state: that's what National Insurance is meant to cover ..

Next:

Listen to Part 2 of Week 8 on Share Radio - then take the final Week 8 test. After this final week, your personal dashboard will be complete and you'll be ready to download your Statement of Participation Certificate.

Managing My Money

is broadcast by Share Radio and is based on the Open University Business School online course of the same name.

Your presenters are Glen Goodman and Annie Weston.