Protecting your possessions in retirement
Insurance can be an important factor when it comes to genuine peace of mind. Having the right cover in place means you can relax, knowing that the effects of unexpected and often unwelcome future events can be minimised. This allows you to safeguard your most cherished possessions – from the house, to your car and even your pets.
Do I really need insurance when I retire?
One of the many changes that people experience when they retire is that of living on a fixed income – often lower than they were used to receiving when they were working. And, while insurance can be a considerable expenditure out of this fixed income, the costs of replacing your possessions – whether it be your car, your TV, or looking after your pets if they become sick or injured – can be considerable. So, unless you have savings to fall back on, insuring the things that matter to you can be a worthwhile investment. We look at the key points in detail.
Home and contents insurance – do I really need it?
Most mortgage lenders insist you have buildings cover in place, but very few of them will insist on contents cover – that’s usually up to you. However, it does make sense to protect your assets properly, and it’s a very good idea to make an inventory of your personal items for that purpose.
In retirement, this serves the dual purpose of helping you to understand what your estate is worth from year to year. That’s very useful when it comes to considering Inheritance Tax, and making sure you have arrangements in place that reflect the true value of your estate.
How do I know how much cover I’ll need?
An estate agent will be happy to give you an approximate market valuation, but should anything happen to your home, then an insurance company will usually offer cover for 'rebuild' value, which will be slightly lower than that amount.
When it comes to insuring your contents, it's surprising how quickly the value of what you own can add up. It's easy to remember things like jewellery, computers, televisions and antiques – but what about cutlery? Crockery? Carpets? Light bulbs and kettles? If you were unfortunate enough to lose everything in a fire then you'd have to replace it all.
That's also why it's important to make sure you know what's covered under your policy, and what's not. Make sure you check the small print and review your cover regularly.
Are insurance comparison sites worth using?
They can be. But don't dismiss the idea of 'going direct' too. Some companies offer discounts for eliminating 'the middle man', and there may be products that are exclusively available by purchasing directly, or online via the providers' websites.
What about car insurance?
As you get older, you'll find there's something of a division in opinion among car insurance providers. Some will take your maturity into consideration and 'reward' older age by offering lower premiums, on the basis you may be less likely to have an accident due to reckless behaviour. But others believe you'll be more of a liability – failing health and slowing reflexes being to blame in most cases – and a few insurance providers will refuse you as a customer, over a certain age.
What's important, is that you spend time understanding what each provider offers, as no two policies are identical:
- Be honest about your health, remember to declare any medicines you’re taking.
- Ask if reduced premiums may be available for paying the whole policy up front.
- If you do have an accident, use the claims line provided – the provider’s customer service team is there to help you.
Anything else I should know?
Yes. If you're happy with your current insurer, and don't have a history of claims with them, it's well worth having a conversation to find out if they'll continue cover – despite what their general marketing claims.
In addition, an agreement drawn up between the Association of British Insurers (ABI), the British Insurance Brokers' Association (BIBA) and the government means that if an insurer or broker won't offer cover to an older motorist due to their age, then the firm must help them seek an alternative provider.
And if your insurance premiums are rising year on year, it may be worth adding a younger person to your policy as a named driver – as this may bring those premiums down.
I have several pets. Do I need to insure them as well?
Pet insurance can be ideal, particularly if you're relying on an animal for companionship and you're on a limited regular income in retirement. But there are some key things to consider before you take out a policy (and don't worry, the providers aren't worried about your age):
- Can you afford to keep up the premiums on a limited income?
- What will the premium cover – will it cover every routine check-up as a ‘lifetime’ policy?
- Would you prefer accident insurance only, which is likely to be cheaper?
- Does your pet have any illnesses that you do need to declare?
What else do I need to know about pet insurance?
Depending on which benefits you're claiming, you may be able to get help treating your pet without making a claim on pet insurance.
The People's Dispensary for Sick Animals (PDSA) offers discounts and some free treatment to anyone receiving means-tested help with their rent or Council Tax liability (Housing Benefit or Council Tax Support/Reduction), and live within a defined catchment area around a PetAid hospital, branch or practice.
And if you're receiving Pension Credit, it's possible the Dogs Trust may be able to help you with treatment costs for your dog, depending on where you live in the UK.