Are you covered

Wednesday 2nd July, 2008 Debt consolidation news

People who chose to save money by not taking out adequate insurance may end up paying in the long run, claims personal finance expert.

David Kuro, head of personal finance of Fool.co.uk, said those who are thinking about saving money by not taking out certain insurance policies should think reconsider. Mr Kuro states the acid test for making such a decision about insurance is "whether you can afford to bear the risk?"

There are certain insurances which you cannot afford to be without; car insurance - it's the law and house insurance - very few people could afford to build a new house. However, there are some insurance policies you could do without eg; warranty cover for any electrical appliance- you have rights under the Sales of Goods Act. Debtwatchdog's tip for insurance is to work out the likelihood of a mini disaster happening. Then work out whether you would have to replace the broken item, if so would it be relatively easy to get your hands on the money. Alternatively put aside what you would pay in insurance and if the worst happens use that money to rectify the problem.

Many, so called insurances are sold to give you peace of mind, but in actual fact are ripping you off. Your financial management task is to get rid of all the types of insurances which you don't really need especially if you are in debt. The best debt management strategies involve getting rid of financial millstones and unnecessary insurance must be top of your list.