Going through life without any sort of insurance, any kind of backup is tough. No matter how much we plan ahead, no matter how hard we try, things will eventually go wrong. And when they do, we need something to fall back on. That’s why we like to prepare for back-ups. This is also why I’ve branched out after my initial success. You don’t want all of your investments to be locked into the same thing, or even – into the same field. You should always be looking for ways to expand and diversify.
Hello everyone, and welcome back to my blog. In today’s post, I’ll be talking about insurance as a means of creating a financial backup for your life. Before we begin, I’d like to remind you that I am by no means a financial advisor or a licensed professional in the field. All of the information below is based on my personal experience and research. As always, I’d urge you to do your own research and consult with an expert before implementing any significant changes in your professional or personal life. Check out my other blogs such as, “Things You Should Never Have Bought As A Minimalist“.
Setting finances aside for insurance funds achieves a similar goal to diversification. It gives you peace of mind that, should things go wrong, you have a reliable backup plan. It provides you with the security of knowing that if you find yourself in a hospital, if your assets suffer damage, or if the market crashes, you won’t be left helpless or penniless.
But which types of insurance do you need when living abroad? Personally, I’ve got the following types of insurance:
- Health Insurance
- Life Insurance
- Critical Insurance
- Key Person Insurance
- Mortgage protection insurance
- Travel insurance
- Pet insurance
- Home Insurance
- Car insurance
In the UK, medical insurance can generally be one of two types – moratorium underwriting and full medical underwriting. The former has fewer requirements, but will also not cover conditions that might’ve affected you over the last few years. The latter offers extensive coverage at a substantially higher cost. And while it does require you to share your medical history in full, it will provide you with a much bigger safety net.
Health insurance will cover the cost of private treatments, up to a certain point (depending on the plan or circumstances). It can give you:
- Shorter queues
- Higher-quality rooms and better facilities
- Fast diagnosis
- Choices about the time and place of treatment
Life insurance (or life cover) is a contract that will pay out money to your family in the event of you passing away. And while most people would much rather not think about the subject all that much, it is after all, inevitable.
Especially important for those who have (or are planning on having) children, a life cover ensures that no matter what happens to you, there is something for your kids. Yes, your spouse will have it tough. They’ll most likely struggle financially and professionally. They’ll probably have to fight through an immense drop in productivity, and they’ll have difficulties comforting your children. But at least they’ll have something to rely on until they manage to get back on their feet.
Critical illness cover will help you if you get into a situation, requiring urgent medical attention in the form of surgery. It will alleviate the financial burden on your family, by covering a specific portion (based on your plan) of the treatment cost. Critical illness cover policies can also cover some of the more dangerous conditions.
If you’ve got an ongoing condition, you’ll need to look specifically for companies that are willing to take you on and cover it. Additionally, insurers will usually ask for full medical details, both of you and of your family. Leaving anything out here is ill-advised since the insurance company can refuse to payout.
Key Person Insurance
In many businesses (mine included), there are key people, responsible for the majority of profits, or individuals, possessing unique and difficult-to-replace skillsets. In some companies, this can also be attributed to the holders of Intellectual Property. When a business loses a key person, it can take out the policy on the health of the given employee to cover for some of the harm suffered by the company. Usually, employers use these funds to offset the cost of trying to find a replacement, as well as cover for the potential business loss.
Generally speaking, there are four insurable loss categories that key person insurance can cover:
- Losses are related to an extended period, during which a key person is unable to contribute to the business.
- Losses related to profits.
- Protection of shareholder and partnership interests.
- Insurance for the persons involved in guaranteeing business loans.
If you’re a fan of traveling like me, but you happen to be uninsured, this is definitely something to consider. Vacations, business trips, and anything else related to long-distance transportation carry with it a significant number of risks.
Before leaping into a travel insurance contract, please consider the following:
- How often do you travel in general?
- How many trips are you planning within the next year?
- Where are you going to go?
- Who are you going to be traveling with?
- What is the current situation in the countries that you aim to visit?
Along with unexpected expenses, travel insurance also provides cover for your luggage and belongings. Here are the main advantages of travel insurance:
- Emergency Medical Cover
- Cancellation, curtailment, and missed departure
- Personal belongings and money
- Personal liability cover
Pet insurances function much like their “human” counterpart – they provide you with a cover for injuries, medical treatments, loss, or death. Depending on your insurance provider, the exact terms and conditions will vary.
What does pet insurance cover?
In case your pet passes away or gets severely injured, most pet insurance providers will pay out a portion of your pet’s “cost”. This being said, you should be wary of the potential limitations here. Just like with life insurance and critical illness insurance for humans, pet insurers will have various age limits included in their policies. After your pet gets past a certain age, you will need to amend your contract or cancel it altogether.
- Missing pet cover
- Third-party liability (do only policies)
- Overseas travel cover
- Cattery and kennel fees
- Euthanasia, cremation, and burial
- Dental cover
Home insurance protects your private property and belongings. As a homeowner and a property investor, I’m a big fan of home insurance for obvious reasons. Whether you’re a landlord, an investor, or a homeowner, you will generally want to ensure your property as soon as possible.
In the UK, you’re offered a choice between the following three types of home insurance:
- Building insurance
- Contents Insurance
- Combined Insurance
Buildings insurance protects your property in the case of damage from:
- Natural disasters
- Fallen trees & lamp posts
- Aerials or satellite dishes
- Vandalism & malicious damage
- Subsidence Vehicle or aircraft collisions
- The home contents insurance will alleviate replacing your damaged, destroyed, or stolen belongings. Contents insurance can cover:
- Furniture: beds, sofas, wardrobes, and dining tables and chairs
- Kitchenware: cutlery, cookware, microwaves, and kettles
- Entertainment: video games, toys, DVDs and CDs Soft furnishings: cushions, curtains, and bedding
- Electricals: TVs, laptops, and game consoles
- Clothes and Jewellery
- Ornaments and Antiques
Generally, UK-based car insurance policies tend to cover your vehicle, as well as any damage you might cause to other vehicles, properties of other drivers, and to motorists. If you wish your car insurance to include other things, like your personal belongings, medical expenses, or even breakdown assistance, you should look into the extended policies of your insurance company.
Not long ago, two of our company cars got involved in an accident. The other party happened to not have any sort of insurance to fall back on and sorting out the entire thing turned into a huge hassle. I can’t believe that there are still people who’d risk driving without insurance in this day and age.
Mobile phone insurance covers the cost of repairing or replacing your mobile phone if it is lost, stolen, or damaged.
In addition to covering the cost of repairing or replacing your mobile device, most mobile phone insurance policies also cover the following:
- Unauthorized calls
- Phone accessories
- Protection abroad
- Apps, games, music, and other valuable content
This is perhaps the type of insurance that I care about the least. As a matter of fact, I’ve personally never had mobile insurance, as I just don’t see it as a worthwhile investment.
I see all of the above insurances (well, except for the mobile one) as crucial. They protect my assets, give me peace of mind and help me go through life in a much more relaxed way.
And I’m happy to say that I’ve never actually had to use any of my insurances, except for my health insurance. “But isn’t that just a waste of money then? Putting your funds towards something that you might not ever need?”. I’ll reiterate my point above – you’re only paying for the act of recovering from a bad situation, but you’re getting a lot more out of the deal. You’re getting comfort and peace of mind!
And would you look at that – it seems like we’re all out of space for today!
If you’ve liked this article and would like to learn more about financial independence and success, take a look at the links in the resource section down below!
What about you – what is your experience with insurance? Which types of insurance are you most fond of? As always, if you think that I’ve missed something, or if you’ve got your own ideas or experiences to share, please do not hesitate to let me know in the comments below – I always love hearing from you!
Thank you all for reading, and until next time:
Stay green and motivated!
Recommended for further reading:
- How to Win Friends and Influence People
- You Are a Badass: How to Stop Doubting Your Greatness and Start Living an Awesome Life
- Happy: Finding joy in every day and letting go of perfect
- Business Secrets from the Bible – Daniel Lapin
- MONEY Master the Game – Tony Robbins
If you are looking to open an investment account, follow these links below:
- Passive income
- Silver & Gold coins
- Interactive Brokers
(‘68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.)