Why is insurance important and what can you protect?

Insurance is all about managing risk. Some insurance is compulsory, for example, automobile insurance for drivers. You might need other insurance as a condition of contract, like homeowners insurance if you have a mortgage on your home. Most other insurance types are a matter of choice, and involve you prioritizing what's most important, within the budget you have available.

Protecting the things you love:

• Car – including accident, breakdown, gap, liability and collision insurance
• Home – including property, contents, valuable items
• Personal items – like your phone, tablet, jewelry, gadgets, collectibles
• Travel – including vacations and flights

Protecting the people you love:

• Life – providing peace of mind with a lump sum payment if you pass away, as well as helping you to leave a meaningful legacy for you and the people you care about
   

Protecting yourself:

• Long Term Care and disability – including income protection, payment protection and critical illness insurance
  

It may also be worth prioritizing the risks that you'd find hardest to cover yourself. For example, most people would not be able to replace all their belongings after a serious fire.

For other, smaller risks, it might be worth considering putting regular savings aside in an emergency savings fund, rather than taking out insurance.