Do You Really Need Home and Life Insurance?

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When I bought my first home I was asked all sorts of questions about home and life insurance, and I wasn’t entirely sure whether I needed either of them. But now I’m a bit more clued up on what exactly they both cover and have a clearer idea of the cover that I need to protect myself and my family.

Research commissioned by HSBC shows that 10% of people who have purchased insurance say that they do not understand exactly what they’re paying for.

If you’re wondering whether you need home or life insurance, especially with the rising cost of living making you reconsider your monthly expenses then this is the post for you.

What is Life Insurance?

Life insurance (also known as life cover or life assurance) is a form of coverage that offers your loved ones financial security in the event of your passing. It can lessen the financial burden your death might place on your family and provide those you care about the most comfort.

The majority of life insurance policies are made to provide your loved ones with a lump sum of money if you pass away while covered by the policy. They can use it to manage regular financial concerns like rent, child care, or mortgage payments.

You decide on the level of protection you require, the length of time you need it, and whether you want combined or individual life insurance coverage.

What is Home Insurance?

If something were to happen to your house, possessions, or both, home insurance would offer you financial protection. Your insurance coverage may include protection against theft, fire, flood, loss, accidental damage, and other events. There are two main types – buildings insurance and contents insurance.

• Building insurance – This covers you in the event of damage to the structural building of your home (e.g. walls, roof and floors). Building insurance is not compulsory, but it’s usually a condition of your mortgage to have it.
• Contents insurance – This covers you for loss/damage to your possessions within your home in the event of fire, theft, flooding or other event. Contents insurance is optional but it may be worth considering if you have items inside your home that you would need to replace should the worst happen.

Some of the reasons for home insurance from research commissioned by HSBC include peace of mind (41%), it’s reassuring (31%) and it’s comforting (18%), while the main reason against home insurance is that it’s expensive (30%).

Should you cancel your insurance?

The rising cost of living may have you reviewing your monthly expenses and you may start to wonder if your insurance premiums are really worth paying. But before you cancel any policies it’s worth considering if you can reduce the cost or cancel insurance that you no longer need. Here are my top tips for reducing your insurance costs:

• Shop around – you may find that you can get exactly the same cover for cheaper elsewhere. 60% of people use a comparison site to shop around but it’s always worth getting a few quotes direct from the insurer as they’re not all available on comparison sites.
• Combine buildings and contents insurance – some providers will offer a discount if you take out both buildings and contents insurance through them.
• Secure your home – Some insurers offer discounts for homes that are secured with extra security measures.
• Pay a higher excess – Some insurers offer a cheaper monthly premium to those who pay a higher excess.
• Pay annually instead of monthly – again some providers offer a discount if you pay for the year up front.

The jury is out on whether or not you need home or life insurance and is largely dependant on your personal circumstances. I personally have home insurance as it was a necessity when I took out my mortgage, however, I don’t have life insurance (yet) as I don’t have any dependants, my mortgage is paid off and I have enough money saved to help my family pay for any costs should the worst happen.