Insurance and Protection
Some types of insurance and protection are compulsory (for example car insurance and building insurance), but there are also many others that can protect you and your family in certain events and emergencies and therefore help to prevent debt.
Protecting Your Family.
- Life Insurance - will pay out in the event of death
- Critical illness insurance - this type of insurance pays out a lump sum if you are diagnosed with certain life-threatening illnesses, such as cancer. Check the policy carefully though, as many illnesses are not covered.
Protecting your income.
If you become ill you might get sick pay for a while, but otherwise you would have to rely on your savings or state benefits.
- Income protection insurance - pays you a regular amount to help replace your earnings if you are unable to work due to illness or injury and don't get paid.
- Accident, sickness and unemployment insurance - this replaces part of your income if you can't work because of long-term illness or disability, but only pays out for a year or two.
With any income protection insurances it is important to check what the cover does and does not include to make sure the policy is right for your circumstances.
Protection against events.
- House buildings insurance - your mortgage lender will usually insist that you have buildings insurance to protect your home if it is damaged or destroyed. You don't usually have to buy your lender's policy, you can shop around to find the best deal for you.
- House contents insurance - this covers your contents in the event of theft or fire. You can buy it in a package with buildings insurance, or as a separate policy.
- Travel insurance - this will usually pay out if your belongings are lost, damaged or stolen or if you have to cancel your trip because of illness or if you are taken ill while you are on holiday. Remember, you don't have to buy the holiday insurance sold by the travel company - you can shop around.
Debt Consolidation Explained contains general information only. We strongly advise you to seek qualified professional advice before taking any action.