Insurance as a financial product

Insurance transfers the financial risk of a bad event to an insurer in exchange for regular premiums. It protects your plan from being derailed by disaster.

Protection you likely need

• Life insurance — pays a lump sum if you die, protecting dependants. Term life covers a set period at low cost and is enough for most people.
• Health / medical insurance — covers treatment costs.
• Income protection / disability — replaces income if illness or injury stops you working.
• Home and contents, and liability — protect major assets.

Protection vs investment products

• Pure protection (like term life) is cheap and does one job well.
• Bundled products (whole life, endowment, unit-linked) mix insurance with an investment. They're often expensive and opaque. A common principle: "buy term and invest the difference" — get cheap protection, and invest separately in low-cost funds.

How much cover

Enough to clear debts and support dependants — not so much you're over-insured. Review it as life changes (marriage, children, mortgage).

Key takeaway

Insurance is about protecting your net worth and the people who depend on you — not growing wealth. Prioritise simple, adequate protection; be cautious with products that blend insurance and investing.