Insurance - why it is so important

Insurance is a way of looking after you, your home and your family, should the worst happen. It’s sometimes hard to think of spending money on something you may never see the benefit of, but if you are the victim of a house fire, burglary or flood, or you find you are too ill to work or lose your job, insurance will be what keeps you going. Plan for the worst, hope for the best is always advisable.

Insurance – what it is and how it works

With insurance, you first choose what you want to be protected against. Your insurer then calculates the risk of the events to be insured against actually happening. When they know the risk, they can calculate how much they want you to pay – your premium. There are three main steps to getting insurance:

Choose a policy

Most policies will cover the same basics but there will be variations in the small print. It’s important for you and one of our advisors to take a good look at what they cover, and to make sure that the policy includes what’s most important to you.

Pay the premium

The premium is the amount you pay to protect your home, belongings or income. The amount you pay depends on the risk and value of what you’re protecting. If you’re looking to protect a large income or mortgage, or your house would cost a lot to re-build, the premiums will be higher.

Make a claim

If and when the worst does happen and you need to make a claim, make sure you remember a few simple things:

• Check your policy first and contact your insurer immediately: they may want you to use a specific company for any emergency repairs, for example.
• Have all your paperwork to hand: your policy, any receipts for household items and a clear record of what happened and when.
• Use the insurance claim line: armed with all the information above, call the insurance company’s helpline and they’ll take you through your claim step-by-step.

Why it’s so important

It’s not compulsory to take out insurance but if you have a mortgage on your property, your lender will almost always insist that you have adequate protection. Although insurance might seem like one more expense you could do without, it really is worth investing in, as it will mean you don’t have to worry about money when you are dealing with other stressful life events. Home, income or life insurance means you’ll know you’re covered in the eventuality of any major event and be able to continue living in your own home.

You may be covered by a death-in-service policy at work but it’s important to check exactly what cover that provides. You want to be certain your family can keep their home if you are not around to look after them.

Find the insurance product that works for you - Advisor insights
“First Mortgage can sort out your insurance for you. We see it as part of the mortgage process: once you have a mortgage to pay for your home we want to make sure that you and your home are properly protected. We’ll take you through the insurance products we think would suit you best, in the same way that we recommend mortgages. Then we’ll help you through the application and setting up process. We don’t usually get involved in claims, as you can go direct to your insurer, but if you ever got stuck, we’d certainly be here to help.”
Hazel, FM advisor, Edinburgh