Yahoo Finance 
Which insurances do you really need?
With the cost of living rising and our money being ever more squeezed, it's natural to look for areas to cut back on. Various research suggests insurance has been one of the things to fall by the wayside for some people, but this might turn out to be an expensive mistake.
Having said that, could you actually live without some forms of insurance and save some money? Let’s have a look at the different types of insurance, whether you really need them.
General tips for cutting your insurance costs
Shop around, using comparison engines such as ours on Yahoo!
Increase the excess, ie the amount you’re obliged to pay if you make a claim. Many people are now doing this in a bid to shave a bit off their premiums. The real danger with this is if you have to make a claim you could end up seriously out of pocket.
If it's cheaper, pay your premiums upfront in one instalment.
Motor insurance
Who needs it? Anyone who drives a motor vehicle. If you don’t have it, you’re breaking the law.
How to cut the cost: Use comparison engines like ours here on lovemoney.com to compare quotes. But make sure you also look at those insurers who don’t allow their results to be featured on comparison sites such as Aviva and Direct Line. For more tips, read 23 ways to slash the cost of car insurance.
[See if you can drive down the cost of your car insurance]
Home insurance
Who needs it? There are two elements to home insurance: contents insurance, which covers your possessions, and buildings insurance, which covers the cost of rebuilding your home should disaster strike. You’re not obliged by law to have contents insurance, although it’s very sensible. You will almost certainly need buildings insurance if you have a mortgage on a freehold property.
How to cut the cost: Before you shop around, make sure you have an accurate estimate of both the value of the items in your home and your rebuild value, if necessary.
[Compare home insurance policies and see if you can save]
Life insurance
Who needs it? Anyone who has dependents, whether they be just a partner or children as well, who would face financial hardship if you died suddenly.
How to cut the cost: If you have life insurance through your employer, subtract the value of that from the total amount of cover you want, which will lower your own premiums.
Of course, not smoking and generally keeping healthy will also help keep the cost down.
Travel insurance
Who needs it? Anyone travelling overseas. An increasing number of people are going away without it, but this is a recipe for potential disaster if something goes wrong.
How to cut the cost: If you’re only going to Europe, the Nationwide FlexAccount offers free annual multi-trip insurance, providing you pay in at least £750 a month. However, it costs extra to increase this to joint or family cover, in which case you might be better off buying it elsewhere. For more tips on what to look for in a policy, read Travel insurance: Quirky features to watch out for.
[Compare travel insurance prices]
Income protection insurance
Who needs it? Strictly speaking, nobody needs it but it can provide peace of mind that your living costs would be covered should you be unable to work through an accident or illness. You should read the small print very carefully for exclusions though.
How to cut the cost: You can defer when payments begin, with a sensible option being when your employer's sickness cover ends, for example 26 weeks after you're ill. You could also opt for a short-term policy, often called income payment protection insurance, which will be cheaper. Or you could specify that it only pays out if you can't do any job that's appropriate for your age, training and experience. But this is more risky.
Private medical insurance
Who needs it? Anyone who wants the peace of mind of being able to go private if necessary, whether it be for the shorter waiting times or private facilities.
How to cut the cost: There are various ways to cut the cost of cover, including scaling back what you're covered for, limiting your choice of hospitals, agreeing to wait for the NHS if the waiting list is less than a certain period of time, and paying some of your costs yourself.
[Is it worth buying private medical insurance?]
Critical illness insurance
Who needs it? Anyone who wants the reassurance that if they were diagnosed with a very serious or life-threatening illness or forced to stop working due to major surgery, they would receive a payout. However, you should read the small print of any policy very carefully to see what is included and excluded before you sign up. And you may want to up the level of cover for a particular condition if it is hereditary.
How to cut the cost: The policy could be cheaper with certain illnesses excluded, although it could be argued that this defeats the purpose of taking out the insurance in the first place. You might also be able to exclude some features such as your premiums being paid in the event of illness.
