It’s an accepted fact. There are things in life that we have no control over. Death is one. Unless we are planning a suicide, the where, when, what and how of our life’s end are things we simply have no prior knowledge of or power over. The same is true for accidents and illness. We don’t know when they will hit us. Of these three risks, however, death is more devastating as its effect on our family’s future is permanent.

Does this mean therefore that we are completely powerless to deal with this eventuality? Not really. Granted we have no idea when death will befall us, there is something we can do to soften its blow. We can plan. We can make sure that, if and when death happens, we are ready.

This in essence is what Insurance is all about. It’s our positive response to a negative risk. For this response to be effective, however, we must be sure it is the right one.

Simply put, our life insurance policy can only guarantee our beneficiary’s future as far as we allow it to. We need to make sure therefore that we purchase one that is well suited to our needs. More importantly, we need to understand the provisions of our policy.

Insurance can mainly be divided into two groups, firstly general, which covers things such as car, home, pet, travel and so on. In short it can be any insurance policy that pays out when things go wrong. Probably you have heard of Auto Insurance, Property Insurance, Term Life, Health Insurance, Homeowners Insurance etc. policies.

The second group is life, of which the policies are of a long term nature or which pay out at the end of a term, this includes pensions.

Understand some of the jargon, this will help you to understand what your policy includes, excludes and where you stand in the event of a claim.

• Excess : An amount of money which the policyholder has to pay towards the cost of a claim, for example, the first £100.
• New-for-old : Cover for property with no deduction for wear and tear. The item lost or destroyed would be replaced with a new one.
• Third party : Someone involved in a claim who is neither the policyholder nor the insurer.
• Underwriter : The person who decides whether to accept a risk and calculates the premium to be charged.
• Write-off : A damaged vehicle which isn’t repairable or one which would cost more to repair than the car was worth before the damage occurred.

Before you take out any policy you need to know whether if you make a claim you will need to pay for any of the cost and if so, how much. This is called the excess.

You also need to know if there are any exclusions or restrictions to the policy, so in the event of a claim you don’t find out too late that the situation you are claiming for, is not covered by your policy. It is also a good idea to find out who to complain to, if there is a problem with the policy.

Always shop around for the best deal, the internet has a substantial amount of content regarding insurance. Always read terms and conditions of any policy, and remember that if you accept an insurance policy, by law you have a cooling off period in which you cancel if you change your mind or decide that its not right for you.