What has insurance got to do with it?

Murphy's Law states that if anything can go wrong, it will. Which explains why having insurance is so important. Having the right kind of insurance is essential to building a solid financial future. Insurance protects you from risk and helps ensure that once you accumulate assets, you will be able to keep them. It’s likely that your own family has been helped by insurance in some way.

For example, someone may have run into your dad’s car, or your home was burgled, or damaged in a storm. You may also have been affected by the need for insurance through events like soccer fees going up because of the insurance premium, or a skateboard competition being cancelled because the insurance costs were too high. Insurance touches many aspects of our lives.

Your family is likely to have a wide range of insurance, such as cover on your house, your family car/s, and personal insurance. Your parents may also have income insurance, to provide an income in the event that accident or severe illness makes one or both unable to work.

TIP – if you have home and contents insurance, add your mobile phone handset to the policy. It will be much cheaper than getting insurance just for the handset with the provider.

What happens if you don’t have insurance?

As a worst case scenario, say you take out a car loan to buy the car of your dreams and you have an accident. The car is badly damaged and the other driver has taken off. The accident isn't your fault and you have broken your leg in three places.

Now, what happens if you don't have insurance? You have to pay to have your car fixed (if that's possible) and you still need to make loan repayments. You can think about how you will do this while lying in a hospital bed for the next month waiting for your leg to get better. Unfortunately, you're sharing this room with seven others because you don't have private health insurance.

Want to think about insurance now?

Learn about the different types of insurance, and how to get the best deal.