MONEY COMMENT
Five Things Every Family Should Have

By Cliff D'Arcy
March 26, 2003

A surgeon once warned me, "Adult tonsillectomy is neither risk-free nor pain-free, Mr D'Arcy", and boy, he wasn't wrong. For weeks afterwards, drinking orange juice was like downing battery acid!

Nevertheless, as a mathematician, I appreciated the fact that he took the time to explain all the dangers and downsides of the operation, as well as its benefits. Life is risky, that won't ever change, and the more you possess and cherish, the more you have to lose when the hurricane turns up (often without warning, Mr Fish).

So, if you want to reinforce your domestic arrangements, here are five tips on making your home more financially fortified:

1. Get a will
Regrettably, if you meet your maker without a will, you'll leave your grieving partner and/or children in financial as well as emotional distress. If you do have a will, the government won't interfere and will allow your assets to be divided up according to your wishes. Read more here.

2. Insure your life
Okay, it's true that most of us will retire long before we expire. However, many men and women of working age die every year from thousands of different causes. In just one year working in the claims department of a small life company, I processed more than a thousand death claims.

Working people are valuable assets; it can cost a fortune to replace both your income and your contribution to your home. Protecting a housewife/husband is equally important, as it's tough surviving when your partner's gone and you've no-one to run your home and take care of your kids.

Term assurance is cheap (particularly if you shop around!), simple and easy to arrange, so make sure you BOTH have it. Read more here.

3. Protect your health
You're many times more likely to suffer a serious illness than you are to die before you retire. There are several types of cover you can buy to replace your income, pay you a lump sum, or pay for medical treatment.

These include income protection (long-term sickness cover), critical illness (pays a lump sum on diagnosis of one of a number of serious conditions), and private medical insurance (pays for private treatment outside or inside the NHS). Ideally, you should have all three but, whichever you choose to have, shop around as monthly premiums vary enormously.

4. Insure your home and its contents
Last year, I came back from holiday to find that a near-neighbour's home had been gutted in a fire. Apparently, a gas lighter exploded and set fire to one of their bedrooms. Luckily, the family got out but their home was ruined - their smoke alarms saved their lives.

Sensibly, they had buildings and contents insurance and their insurer was understandably sympathetic and efficient. However, the experience left the family shocked and they've since sold their (now rebuilt) house and moved away.

Around a quarter of homeowners don't have contents insurance and almost four out of ten don't have buildings insurance, yet well over 50,000 homes are damaged by fire every year. Don't be uninsured when disaster (fires, lightning, storms, floods and so on) strikes.

5. Build up some "rainy day" money
We all need to put money aside for everyday emergencies, such as when your boiler dies before Xmas and it costs £1,200 to replace!

However, you should start saving only when you've got out of debt, as paying off expensive debts is miles better than earning a few extra quid in interest. If you save using a cash mini-ISA, you'll earn the best rates of interest and pay no tax. Once you've built up a sizeable cash reserve, it's a good idea to start saving long-term in a shares ISA.

As Ken Boon (played by the late Michael Elphick) used to say, "Be lucky!" Then again, if you're not lucky every single time, be protected....

Visit our Insurance, Savings and ISA Centres.