Insurance protects you and your belongings from the financial cost of something going wrong.
It can’t stop bad things from happening. Clearly. But if something unexpected does happen – such as a burglary, a car accident or an illness while you’re on holiday – it means you won’t have to pay the full financial cost on your own.
Insurance is all about managing risk. There are some instances where insurance is compulsory. For others, it will depend on your circumstances, how you feel about risk and how much risk you’re prepared to take.
Here’s an introduction to the most common types of insurance to help you work out which ones you might need.
Bear in mind that some bank accounts offer insurance, for example travel, breakdown or mobile phone cover, as part of their package of benefits. So before taking out a new policy, it’s worth checking to make sure you’re not already covered elsewhere.
Types of insurance
If you own a home, you’ll likely need to have buildings insurance as a condition of your mortgage. This won’t cover you for general wear and tear. But it will cover the cost of repairing or rebuilding your home if it’s damaged by storm, floods, fire, lightning or subsidence.
Both homeowners and renters can take out contents insurance. Though not a legal requirement, it covers your possessions in case they’re damaged, stolen or lost. For example, if there was a fire, flood or burglary at your home, it would cover the cost of replacing your belongings. If you’re taking out buildings and contents insurance, many insurers offer discounts if you combine your policies. So this could help you get a cheaper deal.
Explore more: Home Insurance
For many of us, car insurance is the first type of policy we buy. That’s because when you drive you’re legally required to have motor insurance – at a minimum, third-party only cover.
Third-party cover applies to any damage to another person’s car or property. But it won’t cover damage to your car. If you rarely use your car, or you don’t think it’s worth much, then you may decide this is enough.
However, if your car is worth a decent amount, paying for extra levels of cover could make sense. HSBC doesn’t offer car insurance right now but this Money Advice Service article can help you choose the right level of car insurance cover.
Life insurance is protection for you and your family. If the main breadwinner of your family were to get seriously ill or die, this would have a huge financial impact. Life insurance can help give your family peace of mind that if something terrible does occur, they’ll be provided for.
There are 3 main types of life insurance policies:
- Life cover – this will provide a lump sum to your dependants if you die
- Critical illness – this can provide you with a lump sum payment if you’re unable to work for medical reasons such as a heart attack, cancer or a stroke
- Income protection – this will provide a regular payment if you’re unable to work while you’re ill or disabled
If you don’t have any dependants, you may decide life insurance is not necessary. However, if you’ve a partner or family who depend on your income, to cover a mortgage, for example, it’s worth looking into.
Another factor to consider is price. If you’re young and healthy, life insurance offers good value for money – giving you high cover at a relatively low cost. If you take it out later in life, it may cost you more yet you may have more need for it as you’ll be more likely to have health issues.
Explore more: Life Insurance.
Many people have experienced lost luggage. If you’re unlucky, you may have even endured a nightmare trip to a hospital while outside the UK. While it may be unlikely, the potential cost could be substantial.
Travel insurance can cover you for a wide range of events, so it’s worth considering when you book your next trip. And there’s a benefit to buying as soon as you book because it can cover you for cancellation or illness before you’re due to travel
If you travel twice or more in a year, an annual policy can often be cheaper. Whether you buy single trip or multi-trip travel insurance, it could potentially stop an unlucky event becoming very costly.
Since the outbreak of coronavirus, most policies won’t cover cancellations caused by the pandemic. Some won’t even cover your medical costs if you get the virus while outside the UK, so be sure to check the exclusions carefully before buying.
Explore more: Travel Insurance
Most people in the UK are covered by the National Health Service (NHS). But if you’d prefer private treatment or don’t want to wait to be treated through the NHS, you can choose to get private medical insurance.
Before taking out a private health policy, it’s important to look into exactly what you will and won’t be covered for. You should also check the exclusions to make sure you’ve got the cover you need. For example, some health insurance may not cover people with pre-existing medical conditions.
Some employers offer health insurance as part of their benefits package. We don’t offer this type of policy but Money Advice Service can help you decide if you need private medical insurance.
Combining different types of cover into one policy can be a good way to save money – plus it means you’ve fewer payments and documents to keep track of.
You may be familiar with multi-car insurance policies. HSBC Select and Cover combines multiple types of cover in one policy. It lets you pick and choose 3 or more of these 7 different types of cover:
- Mobile phone insurance
- Gadget insurance
- Worldwide travel insurance
- Motor breakdown insurance
- Home emergency insurance
- Starter life insurance
- Excess protection insurance
It covers your partner and any children living with you who are under 18 – or under 23 if they’re in full-time education and living at home during the holidays. So, if you’ve a large family with lots of phones and gadgets, it could make a lot of sense.
Select and Cover is available to existing HSBC customers who are registered for online banking.
Explore more: Select and Cover
Similar to travel insurance, pet insurance is optional. Yet the average cost of a claim is now around £800.1 If something happens to your beloved, pet insurance can help you to cover your costs. And it can help them to get the care they need.
If your pet is relatively young and healthy, you might not think pet insurance is worth it. In which case, you could instead choose to put money into a savings account to cover any possible costs.
If you take this approach, you’ll need to consider:
- how much you can realistically put aside
- if you can be disciplined and not dip into that pot of money for anything else
- what you’d do if you need to pay a vet’s bill before you’ve saved up enough to cover it
Also, bear in mind that if you take out a policy later in your pet’s life after it’s started showing signs of an injury or illness, you wouldn’t be able to claim for that condition.
We don’t offer pet insurance at HSBC but M&S Bank, a member of the HSBC Group, does. Visit M&S Bank for more details.