Imagine going through life with no insurance at all - Must be a bit like driving car without a seat belt in place.

For most people, insurance is a necessary aspect of life. It is the safety net that protects you from a crushing fall or an imminent disappointment during hard times.

Nothing is worse than an unforeseen natural or man-made disaster that unfortunately removes earnings capacity or assets from you or your business.

There are many types of insurance available, such as life, auto, workman’s compensation, liability. And, sometimes it would seem that we can ‘over-insure’ ourselves.

But perhaps the commonest type that is really necessary is property insurance. Whether you are a homeowner or a business operator, property insurance is the one area you should not neglect. So, what is property insurance?

Property Insurance ‘ A Definition

Property insurance is a type of insurance that provides coverage for building structure or structures and its contents. The coverage of property insurance is malleable and is oftentimes depended on the consumers’ needs. In some cases, property insurance may cover outdoor signs, crime coverage, and property of others, glass coverage, and more.

You can get property insurance through a written contract, called a policy. A property insurance policy legally binds you, the policyholder, with an insurance company. The property insurance policyholder will pay the insurance company a certain amount of money, called ‘a premium’ and in exchange, the company will agree to pay for certain types of damages or losses. These damages or losses to be covered by the property insurance are outlined specifically in the contract.

Property Insurance ‘ Importance and Benefits

Property insurance has many benefits. Monetary value is one of these benefits that a property insurance policy can offer. The property insurance company will pay for damages or losses you encounter in such cases as fire or theft. Property insurance is therefore a way for you to protect yourself and your interests.

The amount of money you get from the property insurance company will depend on how much property insurance you’ve bought at the time of the contract-signing. For instance, if you bought a $100,000 amount of property insurance, your insurer will only pay for replacement or reconstruction of damaged property up to that stated amount. Most property insurance companies pay up to 10% in total damages.

Property Insurance ‘ Types

There are many types of property insurance available. Most of these property insurance types are categorized according to the needs of the policyholders.

For instance, a landlord has different property insurance needs as a homeowner. What the landlord owns is rental property and the specifics involved in that property type is different from a home. Rental property insurance covers the damages or losses arising from negligence on the tenants’ parts.

As all property insurance, rental property insurance offers coverage for the actual building structure and its contents. Rental property insurance can pay for the cost of repairing damaged articles, such as carpets, furniture, curtains, and other house items, caused by guests or tenants.

A homeowners’ property insurance provides the same type of coverage offered by a typical property insurance policy. Most lenders require buyers to have property insurance when applying for a mortgage. The homeowners’ property insurance gives the lenders the security they need to close the sale. Homeowners’ property insurance protects the homeowner from damages caused by disasters, such as fires, floods, earthquakes, theft, vandalism, and the like.

There are several other types of property insurance available. From small business, to medium enterprise, to commercial properties ‘ there’s a different kind of property insurance coverage for each.

Copyright 2006 Geoff Morris

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Life insurance is a financial product that few of us like to think about. We would all like to believe that we are going to live forever, however there comes a point when reality needs to step in and plans are made for the inevitable.

Life insurance is intended to provide some level of protection for financially interested parties should the worst happen. This means that cover can be provided for others who will become financially disadvantaged by the death of the insured person. By taking out a life insurance policy, dependants will not have to deal with all the additional hardships which can be caused by the monetary loss of the insured’s income or productivity.

Life insurance is most frequently taken out to protect family members and replace the breadwinner’s salary ensuring that the family home will not be lost, however it can also be used to cover the costs of a paying for the tasks a house person performs on a daily basis, such as child care, housework, gardening, etc. Businesses also commonly take out life insurance policies on their most important employees to protect against any financial losses to the company that could be incurred due to their death.

For most people life insurance is used to protect their family by providing a lump sum to pay off any loans or mortgage repayments, so that the family home is protected, or to provide a replacement family income, but it is also often used to help cover funeral expenses, inheritance tax or provide an emergency fund to cover a period of financial instability following the insured’s death.

There are two broad types of life insurance: term insurance and investment type policies. Term policies are the simplest and generally the cheapest form of cover and will provide protection for a set period, after which the policy will lapse. Investment type policies such whole-of-life insurance, provide cover for as long as the policy holder lives, as well as building up an investment value which can be cashed in by surrendering the policy.

When considering what type of life insurance policy is most suitable, it is vital to decide what the purpose of the cover is to be, along with calculating how much cover is required. This is important when choosing the level of the cover needed.

The main cover types currently available are:

- Level term policies which will pay out a set tax free lump sum upon the policy holder’s death and premiums are set at the time the policy is taken out.

- Increasing term insurance is similar to a standard level term policy; however the value of the lump sum (and usually the premiums) increases with time to compensate for inflation or rising prices.

- Decreasing term is a type of life insurance where the lump sum value reduces over time. This form of cover is usually taken to protect loan or mortgage repayments, where the overall amount required to pay off the loan amount will decrease as regular repayments are made.

- Increasable term life insurance provides the option to increase the level of cover in the future, with the corresponding premium increases being based on the policy holder’s health at the time of initially taking out the policy without the need for a need medical or major re-evaluation. This type of policy can be useful to provide additional cover following marriage or the birth of a child.

- Renewable term insurance enables the term of a policy to be extended when the initial period comes to an end. The premiums to be paid are, like increasable terms, calculated based upon the policy holder’s health at the time of the policy being taken out.

- Pension-linked term policies such as B-Assured life insurance from Barclays allow the policy holder to claim tax relief on their premium payments, as long as they are eligible to contribute to a personal pension or stakeholder scheme.

For a life insurance guide and life insurance comparisons visit Moneynet or view the regular surveys in Which? and specialist personal finance magazines.

Disclaimer:

All information contained in this article, is for general information purposes only and should not be construed as advice under the Financial Services Act 1986.

You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.

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Almost every time you try to buy a financial product someone tries to sell you an add-on. It doesn’t seem to matter whether you are signing up for a mortgage, loan, credit card or store card. Most lenders try to get borrowers to sign up for payment protection insurance but do they really need it? Here is what you need to know about payment protection insurance.

What Is Payment Protection Insurance?

Payment protection insurance (PPI) is a form of insurance to make sure that borrowers can keep up repayments on mortgages, loans, credit card, store cards and other financial products if they face financial hardship.

Why Would I Need PPI?

1. If they have an accident that prevents them from working

2. If there is an illness that prevents them from working and earning

3. If they are made redundant or become unemployed

Any or all of these situations could make it difficult to keep up repayments. Payment protection insurance could cover repayments for up to 12 months in these cases, depending on the policy taken out.

People in the UK are borrowing more and saving less and redundancies are often in the news. It takes longer and longer to qualify for state benefits, so without some form of insurance people might end up in court and might even lose their homes if they were unable to keep up repayments for long periods. These are many of the reasons that sales people use to persuade borrowers to get PPI.

It is worth noting that most policies have exclusions relating to medical conditions and drug and alcohol abuse. There is also usually a period of 60 to 120 days after taking out the policy during which time borrowers cannot make a claim.

What To Look For With PPI

Payment protection insurance has often been slated for being unfair to consumers and there are some issues that borrowers should pay attention to. For example, it is worth checking whether the cost of the insurance will be added to the amount borrowed. This would mean that you pay interest on the insurance as well.

It is also worth paying attention to the actual cost of the insurance. This can vary quite widely, so borrowers should look beyond the low interest rate on a loan or credit card to see what the total cost of borrowing will be.

Alternatives To PPI

Although PPI has been criticised for being no more than a money-making scheme for lenders (it is currently under investigation by the Office of Fair Trading), there are very good reasons to take out some form of insurance against ill health, accident or unemployment.

What most borrowers don’t know is that they can take out separate insurance policies which will cover not just the particular financial product, but a substantial part of their income. This type of income protection policy may be a better bet if you usually make debt repayments from your earnings.

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