4 questions to ask when you're planning for a rainy day

Even if you live in the desert, you still need to ensure that you and your loved ones are protected against a rainy day.  Here are 4 questions to ask, when you’re thinking about what you need to do to look after yourself and the ones you love.

Who needs to be protected?

If you’re a single, young adult without children, then maybe all you need to protect is yourself and your pets.  Once you start getting into relationship and children come along (or maybe you’re assuming financial responsibility for elderly relatives) then you need to think about protecting them as well as yourself.  Remember that the income you earn is only a part of your overall value, if anyone you care about is relying on you in any way, you need to think about how much it would cost to employ someone else to do what you do and factor that into your calculations.  For example, if you have responsibility for looking after children, then you need to think about the cost of paying for childcare if you became unable to fulfil this responsibility.

What needs to be protected?

The best way to look at this question is generally to start with yourself, the people you love and your pets and then move on to physical possessions.  

Starting with yourself, think about your health.  Even in the UK where we have the NHS, private medical and dental insurance can be a very useful add-on.  Younger people may feel that this is unnecessary because they’re in their best health, but anyone can have an accident or get sick or get a tooth knocked out and private medical insurance can make a lot of difference to your options as, when (and yes if) that happens.  If you’re young, medical insurance is at its cheapest, so at least think about it.  If you’re older, your chances of experiencing health problems go up, so give it serious consideration.  

After your health, think about your wealth, how would you live if you were unable to work for an extended period due to an accident or illness?  If you’re employed, you may have some degree of insurance cover from your work but will it be enough?  You’ll only know if you check.  You may (or may not) need extra cover.  If you’re self-employed, or rely on income from a side-hustle, this is a key question.  

Then think about your lifestyle and where you could potentially be exposed to risk by people making legal claims against you.  This may seem like paranoia, but actually, it’s a very real possibility.  It’s the reason why almost all road users have to have at least third-party insurance.  The exception (in the UK) is cyclists, but many cyclists could actually potentially benefit from insurance.  The reason for this is that if a cyclist is involved in an accident with a driver and the driver blames them, then the driver’s insurance company has motivation to fight the driver’s corner and if the cyclist is uninsured, they might well find that they are made a scapegoat for the incident, whereas if the cyclist has insurance they are a much more difficult target.  Likewise if you have pets, particularly dogs and horses, then you could benefit greatly from third-party insurance even if you are unable to get (or prefer to avoid) insurance to cover veterinary bills.  

Once you’ve covered this, look at the people around you, such as partners and children and see if they would benefit from insurance for themselves, even children could benefit from medical and dental insurance, and if you have pets, definitely think about insuring them (veterinary bills can be very expensive, even for smaller pets).  Then and only then, move on to your possessions, starting with the ones which are most important to you.

Where do you need the protection?  

Your home is one obvious place, but the way you see your home may be different from the way an insurance company sees it.  For example, you may think of your garden and outbuildings such as garages and sheds as part of your house, but some insurance companies may disagree, again you need to check.  If you’re self employed and work outside the home, what about your place of work?  Do you need protection when you’re travelling?  What about items you take from one place to another?  Does your home insurance cover them or do you need extra insurance?

When do you plan to review your level of protection?

Are you expecting any major life events in the near future (births, marriages, house moves, children going to school or leaving home), if so make a plan to review your cover to reflect these changes.  Otherwise, review your protection at least once a year.

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