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 ..

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.