In the know
When should you buy insurance?
Life throws different challenges at us, all the time, and the risks that concern us will change depending on where we are on life’s journey.
Insurance is about managing risk – and risks may change with your circumstances.
It’s important to remember you are only covered by insurance if you have bought a policy and the claim occurs within your policy period.
Buying something new
When to buy insurance will depend on what you want to protect and where you are in life.
Insurance is often purchased at the time of, or before buying a new asset, such as a car, home, or boat. Insuring an asset before putting it at risk transfers that risk to an insurer.
For example, before you drive your new car you are required by law to purchase motor vehicle accident personal injury insurance, and you may also take out comprehensive car insurance or third-party property insurance. The type of additional insurance you take out will depend on which risks you would like to transfer to an insurer.
If you decided not to buy comprehensive or third-party property cover and you were involved in an accident, you would not be covered for any damage to your own vehicle or a third party’s vehicle or property. This could cause significant financial hardship.
Changes in your life
Your priorities when you’re leaving home to start out as an independent adult will be very different from those you have mid-life, when you might have a partner, children, and a mortgage. They are likely to change again as you approach retirement and your children have left home.
As your lifestyle changes, your financial circumstances and your insurance needs will also change. Perhaps you will buy a new home or car, start your own business, move to a new suburb, buy furniture or take out a loan.
We all face different risks and changing circumstances. Fortunately, there are plenty of options available to help you protect your lifestyle from the risks that concern you most.
Generally, if there is a risk to you or your assets and the financial loss would be significant, you can insure against that risk.
If you have complex requirements or you wish to speak with an expert, First Underwriters Insurance Brokers are specialists in insurance and risk management and can assist you to understand the different products on the market. A financial adviser may also be able to help.
Buying a policy before an event
Some types of insurance may benefit you if they are bought in advance, such as travel insurance. Travel insurance may be purchased as soon as the deposit for the trip is paid. It usually does not cost any more to purchase the cover at this time, and the cancellation cover can start straight away.