7 insurance essentials families need to know about

Insurance gives families vital support at times in their lives when they really need it – so it’s important to understand what cover is available and how it can help.

Explaining how brokers play their part, Graeme Trudgill, executive director of the British Insurance Brokers’ Association (Biba), says: “They can often provide choice and options, along with peace of mind through access to suitable insurance. They can also help to support you during a claim,” Trudgill adds. “If consumers have specialist requirements, brokers can help provide advice and access to suitable policies.”

Here, he outlines seven key types of insurance to consider…

1. Home insurance

“Having home insurance provides protection against fire, theft and flooding, along with other disasters, and you can also have extensions for accidental damage cover,” says Trudgill. “You can even obtain personal possessions cover for valuable belongings that you take outside of your home anywhere in the world, so if the worst happens, your insurance can repair or replace them. Having the peace of mind of insurance is often front of mind for families.”

Biba has a flood insurance directory (biba.org.uk/Flood-insurance-directory), as well as a ‘find insurance’ contact centre people can phone.

If your children are at university, Trudgill says: “It is essential to understand what cover you have under your home insurance for possessions whilst away from home.”

2. Travel insurance

“Obtaining cover for medical expenses and cancellation for Covid-19 should be considered whilst we are in the pandemic – but cover for this, like many other things, varies from policy to policy. So ensure you compare the cover, and not the price alone.”

Trudgill also suggests making sure you’re insured as soon as you book the holiday, so you’re covered for cancellation immediately.

3. Car insurance

Trudgill says families could consider their specific car insurance requirements, adding: “For example: will you be driving abroad on your family holiday so need foreign use? Is a courtesy car essential for your commute or the school run?

“You can consider areas like annual mileage, where the vehicle is parked, security and the excess levels to potentially reduce the premium, but remember that insurance not only covers your vehicle repairs but provides essential protection against third-party injury costs, which could run into thousands of pounds,” he adds.

“If you have a young driver, then it’s worth considering a telematics policy, which is a way of taking control of your premium because it measures the driving style and rewards safer driving. Such policies have shown to moderate driving behaviour – which will provide peace of mind for parents.”

4. Pet insurance

He adds that, as cover can vary and can sometimes be complicated with a range of different types of policy available, advice from a specialist broker can help.

5. Life insurance

Life insurance pays out a cash sum if you die or are diagnosed with a terminal illness, easing financial pressure on families. Trudgill says people often take out life insurance for three main reasons – to repay the mortgage, to provide for their family, and to pay for funeral costs.

“Whole of life” cover will pay out a lump sum whenever someone dies, as long as the premiums are up-to-date.

Trudgill explains: “The premiums for whole of life insurance policies tend to be more expensive than those of term policies, as they are guaranteed to pay out. With a term policy, the benefit will only be payable if you pass away before the cover’s end date.”

He adds that people could consider index-linking their policy, “which will help protect the benefit from the effects of inflation”.

6. Income protection

This helps those unable to work due to an accident or sickness. “The benefit can be used to help pay monthly bills, replace income and/or cover mortgage payments,” says Trudgill. “Most income protection policies will provide monthly tax-free payments equivalent to between 50% and 65% of gross salary, although some companies will offer up to 70%.”

7. Critical illness insurance

This pays out if you are diagnosed with life-changing or life-limiting medical conditions. Policies tend to cover three core conditions – cancer, heart attacks and strokes – but some are more comprehensive and terms vary. Some insurers also will pay a benefit if a child is diagnosed with a critical illness.

Trudgill says: “A critical illness insurance pay-out could be used to repay the mortgage, settle debts and bills, or be put in the bank until, fingers crossed, you’re better and are able to return to work.”