Insurance is, at its core, a trade: a regular premium in exchange for transferring a risk you couldn't comfortably absorb yourself onto an insurer. Not every policy you'll be offered clears that bar at every life stage — here's a practical way to separate the priority cover from the optional extras.
Usually worth prioritising
- Income protection or critical illness cover — especially once someone else relies on your income, or you couldn't cover your bills for long without a salary.
- Contents insurance if you're renting, and buildings plus contents if you own — replacing everything you own at once is rarely a cost worth risking.
- Car insurance — a legal requirement if you drive, not really optional.
- Travel insurance for a specific trip, particularly anywhere medical treatment abroad could be expensive.
Often optional or situational
- Life insurance becomes far more important once you have a mortgage with someone else, or dependants who rely on your income — less urgent if you're single with no dependants and no shared debt.
- Gadget or extended warranty insurance is frequently poor value relative to the cost of replacing the item outright — do the maths before accepting it at checkout.
- Payment protection-style add-ons attached to loans or credit cards deserve a careful read of the exclusions before you assume you're covered for what you actually worry about.
Read the excess and exclusions before you assume you're covered. A policy can technically exist and still not pay out for the specific situation you were actually worried about — the small print is where that gets decided.
A simple way to prioritise if budget is tight
Rank potential cover by one question: "would this genuinely be a financial disaster if it happened tomorrow?" — not by what's being actively marketed to you at checkout or in an email. A £200 gadget you could replace from savings ranks far below a long-term illness that would stop your income entirely.
Not sure what some of the terms on a policy document mean? Our glossary covers excess, premium and a handful of others in plain English.
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