The decision to get insurance depends on your circumstances and your stage in life, such as:
o Buying a home or renting a home or an apartment.
o Starting a business
o Buying a new vehicle.
Insurance can protect you and your loved ones from financial loss or hardship. Insurance can help cover costs if something unexpected happens to:
o You or your family.
o Your vehicle.
o Your home.
o Your belongings.
There are many insurance products that cover different types of risks.
An insurance policy is a legal contract between you (the insured) and the insurance company (the insurer).
An insurance policy specifies:
o Which risks are covered by your insurance company.
o Under what circumstances the insurer will make a payment to you.
o How much money, or what type of benefit, you will get if you make a claim.
Usually the policyholder is the person who owns the insurance policy. In some cases, the policyholder is not the insured, but rather a family member or loved one. The amount of money or benefit you will get if you make a claim depends on:
o The sum insured which determines the maximum you are entitled to.
o The amount of damage or loss to your car or home.
o Your policy for life or health insurance.
Make sure you understand what your insurance policy covers and does not cover. The conditions relating to your insurance policy are normally captured in what is known as the ‘small print’. Make sure that you read these conditions well. If there are matters you do not understand or which you feel are open to interpretation write to the insurer and ask it to respond to you in writing.
To get insurance you pay a fee called a premium. Usually, you pay the premium monthly, quarterly or yearly. The amount you pay as a premium may change over time for some types of insurance. The amount you will pay as a premium is based on the probability that you will make a claim as well as the extent of the risk which the policy covers.
Insurance companies charge higher premiums to people they think are more likely to make a claim. Generally, the amount you pay as a premium depends on factors such as:
o The type of insurance.
o Your age.
o Your gender.
o Your medical history for life and health insurance.
o The value of the goods insured for home insurance.
o The type of car you drive for car insurance.
o The amount of coverage you need.
o Your claim history.
When you pay premiums, your insurance company agrees to pay a certain amount of money for any loss or damages that your policy covers.
Risk is the likelihood that an insured event will happen while your policy is in effect. For example, if you smoke, you may pay higher life insurance premiums than somebody who does not.
For example, if you have several accidents on your driving record, you may pay higher car insurance premiums than someone who has none.
Health, dental, home and car insurance policies may require that you pay ‘€x’ amount of the claim before your insurance company pays the rest. The higher your claim payment level is, the less you may pay in premiums.
For example, if you make a claim for €2,000 but you have to pay the first €500 when you submit a claim, your insurance will only cover €1,500 of your claim.
Exclusions are things that your insurance policy does not cover. For example:
• Some health insurance policies may exclude certain medical conditions you had before you applied.
• A travel insurance policy may exclude claims made if you travel to a high risk country.
• A home insurance policy may exclude claims for some types of water damage.
Normally these exclusions are captured in the policy’s ‘small print’. Reading the small print is vital. Make sure to read them.