Insurance — what's worth paying for

Three policies are essential for most UK adults. If you only ever buy three insurance products in your life, these are the three.

These aren't required by law, but the consequences of going without them are big.

If you can comfortably absorb the cost of the item being replaced, paying someone else to insure it costs you on average. Extended warranties on consumer electronics, mobile-phone insurance bought in-store, and most appliance protection plans fall into this category.

Quote at least three comparison sites — none covers the whole market. Always quote your existing insurer direct, and never auto-renew without checking: the FCA banned 'price walking' in 2022, but renewal quotes still often beat the new-customer price only by a thin margin.

Quote 20–26 days before renewal: insurers typically price quotes as 'new business' at this point, and prices then rise as renewal nears. Cancel any extras you don't want (breakdown, hire car, key cover) and re-add them only if the bundle is cheaper than the standalone alternative.

Term life pays out only if you die within a fixed term (typically 20–30 years). It's cheap because most policies never pay out — but the right product if your goal is to replace lost income for a fixed period like dependent children or a mortgage. See our term vs whole-of-life comparison for when permanent cover makes sense.

Whole-of-life policies pay out whenever you die, so premiums are much higher. They're rarely useful for income replacement; their main use case is funding Inheritance Tax on a known liability. Our whole-of-life guide explains guaranteed vs investment-linked policies and over-50s plans.

Both pay out if you can't work due to illness — but very differently.

Most premium reduction comes from data, not policy choices. Pay annually, add a more experienced named driver (never 'fronting' — that's fraud), agree a realistic annual mileage, use a secure overnight parking address, and add anti-theft devices that the insurer asks about.

Black-box (telematics) policies are usually cheapest for new drivers and people with convictions. Multi-car policies and 'pay as you drive' subscriptions are worth quoting alongside conventional cover. No-claims discount transfers between UK insurers — keep your renewal letter as proof.

Report incidents quickly — most policies require notification within 24–48 hours, even if you don't want to claim. Take photos, keep receipts, and don't admit liability at the scene. For motor claims, exchange details but say only what's factual.

If the insurer rejects your claim or offers a low settlement: complain in writing, get the insurer's final response (it has 8 weeks), then escalate to the Financial Ombudsman within 6 months. The FOS is free, independent and decides claims up to £430,000 (April 2025 limit) — and it overturns roughly a third of insurer decisions referred to it.