Peace of Mind Or Piece of Cash?
by Lisa
Most of us never question insurance.
We insure our cars because we have to. We insure our homes because it feels like the sensible thing to do. Increasingly, more people are taking out private health insurance at a younger age, hoping it will protect them later in life.
But is insurance always worth it?
Recently, I started asking people in their seventies and eighties a simple question.
“If you could go back, would you still have taken out that insurance?”
The answers surprised me.
Some people said it had absolutely been worth every penny. Others said they had paid into policies for decades and never saw the benefit.
One story really stayed with me.
A gentleman told me about his father, who started paying for private health insurance when he was just 17 years old. It was affordable, seemed like the responsible thing to do, and every month without fail he paid his premiums.
He never missed a payment.
For almost 70 years, he remained a loyal customer.
Then, at the age of 86, he was diagnosed with cancer.
For the first time in his life, he needed the insurance he had faithfully paid for throughout his working life.
He was not worried. After all, he had spent nearly seven decades paying into the policy. Surely this was exactly what insurance was for.
Then came the shock.
Hidden in the small print was a clause that meant his treatment was not covered.
Imagine paying into something for almost 70 years, only to discover that when you finally need it most, you are excluded.
It makes you wonder.
How many of us actually read every page of an insurance policy?
How many of us simply assume we are covered?
Then I heard another story.
A man had insured his boat for years. The boat was worth around ÂŁ10,000, and his premiums were well over ÂŁ100 each month. Eventually, disaster struck. The boat capsized and was declared a total loss.
To be fair to the insurer, they paid out promptly.
A month later, he bought another boat.
Then, unbelievably, it was stolen.
This time, however, the insurer refused the claim.
Why?
Buried in the policy was a clause stating that it was only covered during the official boating season.
His boat was stolen just three days outside that period.
Three days.
The claim was rejected.
Again, it came down to the small print.
So it got me thinking.
Is insurance really worth it?
Or would some people be better off putting that same money into a savings account every month?
Imagine saving just ÂŁ10 a month from the age of 17. Over decades, that could become a useful emergency fund without relying on terms and conditions.
Of course, the answer is not straightforward.
If your house burns down, most of us could never afford to replace it ourselves. If you seriously injure someone in a car accident, the financial consequences could be life changing. In situations like these, insurance is not just sensible, it is essential.
We don’t hear the countless stories in which it turns out to be useful.
An exceptional one I heard recently is about a woman whose house was engulfed in fire originating from her neighbour’s house. The neighbour lost everything, but she was able to recoup her losses because of her insurance policy.
I for one will be getting fire insurance. But what about the countless other types?
Phone insurance.
Extended warranties.
Pet insurance.
Private health insurance.
Travel insurance.
Boat insurance.
Where do we draw the line?
Perhaps the real lesson is not whether insurance is good or bad.
Perhaps it is that we should understand exactly what we are paying for.
Ask the difficult questions.
Read the exclusions.
Know when you are covered and, more importantly, when you are not.
Because sometimes the biggest surprise is not what is included in your policy.
It is what is left out.
So, what do you think?
Is insurance one of the smartest financial decisions you can make, or would you rather build your own safety net by saving the money yourself?
I would love to hear your experiences, both good and bad.
