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Insurance Cover

Insurance Cover

Although it comes in many forms insurance can be described, simply, as providing protection against a contingent eventuality. Too many people view insurance as applying only to events causing financial hardship – but this is not true. Carrying an umbrella or rain coat is a form of insurance. Setting an alarm call is another; (remembering the wedding anniversary is another! – Ed).

Unfortunately, when the term is applied to financial transactions it gets lost in a sea of tricky terminology. Endorsement, excess, exclusions are just three pieces of mumbo-jumbo that start with ‘e’ but confusion lurks in every letter, e.g. inception, indemnity and insurable interest.

However, despite the confusing financial jargon most people have a reasonable idea of what insurance is all about – we pay a small regular sum in return for appropriate compensation when disaster strikes. We know it makes sense but we are very reluctant purchasers. In fact there is an old adage in the industry that insurance is never bought – it must always be sold!

It’s quite clear why this should be. How many times has your house burnt down? How many times has your car been stolen? Insurance really makes sense when some calamity befalls you or your neighbour – otherwise it forever loiters in the background. In many ways, insurance resides in that nebulous space where we make payments in the hope that we never, ever have to make a claim for compensation. What a strange mind-set that is!

Only when a qualified financial adviser like MMPI sits us down and explains the pain and anguish that accompanies loss, damage, illness and death are we persuaded of the necessity of insurance – it no longer seems like an excessive luxury.

Some forms of insurance are obligatory – mechanically-propelled vehicles being an obvious example. But, in addition, many other types of insurances are also compulsory, e.g. for borrowings – home; buildings and business insurance. In many industries, appropriate and suitable insurance is essential. In the financial services world no financial adviser would carry on business without professional indemnity insurance.

Even when it comes to life and death matters, insurance is never too far removed. As we are often reminded, death can financially hurt our dependents but serious long-term illness is much more financially damaging to all. Almost by default, many consumers have life cover but not enough have serious illness insurance. We all hope that we never have to make a claim but….

The very thought of insurance and the many horrible things that it protects us against is enough to turn most people completely off the topic. And yet we continue to provide protection for ourselves in other ways as a matter of course. We spread our savings across several banks – we back-up mobile phone numbers – we shop early for Christmas – we avoid poisonous foods – we stop on red – we choose our friends wisely – we cross our fingers. These are all forms of personal protection. Insurance is very important but it needs much softer terminology. MMPI can help with the translations!

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