UK Loans and Lending Guide

Sometimes it can be a struggle to pay everything that we need to. It may be a case of trying to decide which things to no longer buy so that we can break even with our household budget and not have to get a loan to cover everything. There are many things that you might look at to see whether you can save money and your contents insurance might be one of the things that you are considering going without. It is worth giving this some thought.

What is contents insurance?

It is worth thinking first about whether you think that it is worth having contents insurance or not. This insurance will cover the cost if your contents get stolen or damaged. The level of insurance will determine in exactly what circumstances you will be able to make a claim. If your home has a fire or flood then you may need to replace everything, if valuable items get stolen then you may need to replace them too. Insurance cover can give you the money to replace these. You will be able to choose whether the insurance pays out enough to replace the items as new or at the second hand value. You can also choose to insure certain high value items separately and certain named items outside of the home. So, you might want to insure bikes or portable devices outside of the home and name high value pieces of jewellery. The specifics of your policy will determine the price of it.

Can I afford not to have it?

It is a good idea to think about the cost of replacing your contents. You will have to get a good idea of how much they are worth in order to tell the insurance company anyway. You need to then imagine how you would replace items worth this much if you do not have insurance. If you only have a few items and they are not worth much or are happy just to replace a few and slowly build up the rest, then you may be happy without the insurance. However, if you have to clothe your family, furnish the house and replace all the kitchen equipment as well as everything you use for your hobby’s then it could add up to more money then you can afford. It will very much depend on what your salary is, how much you have in savings and how much your items will cost to replace as well as whether you would bother to replace them all.

How can I make it cheaper?

If you decide that you need the insurance then there are ways that you can make it cheaper. This should help you to afford it more easily.

Compare insurers on price – it is wise to compare different home insurance providers as they will differ in price. You can compare them in different ways perhaps using a comparison website, getting quotes from individual providers or using a broker. There are advantages and disadvantages of these so it is worth understanding them so that you can pick the best method for you. If you use a broker or a comparison website
Find the right policy- Although, it is important to be aware of what you get for that price. This is because you could find that some insurances will cover more than others. For example, some may cover accidental damage and some may not, some may replace as new and some may not and some might include a few high value items but others may not. It can be tricky to compare them just on price then. However, it is worth checking them out because you may still find a policy which suits you better than what you have already or offers better value for money.
Pay in a lump sum – sometimes insurers will offer the option of paying for your yearly premium in monthly instalments. However, they may charge more if you choose this payment method. Therefore, it can be wise to calculate whether it will be cheaper for you to pay monthly or annually. If you cannot afford the large lump sum then it can be worth considering whether you should start saving up ready for next year. If you pay monthly this year and take the hit but save up a bit so that you have the lump sum next year. It may even make sense to consider taking out a small loan from somewhere like to pay for the policy in full and save money longer term.

There is a lot to think about but hopefully you will be able to get enough information so that you will not be paying out more than necessary for your home insurance or you might decide to not bother with insurance at all. It is worth understanding what you get cover for and thinking about whether you feel that having the insurance will beneficial. It is a case of comparing the cost against the risk. The risk can be tricky to assess as no one knows whether they might be burgled or their house might suffer from problems that can damage items but if you feel that you could easily replace them without the need for an insurance pay out then it is not worth getting the insurance.

There is a selection of options for savers and these days savers are often on the look out for an option that will get them a bigger amount of interest. With interest rates being so low, it means that sometimes savers will find that the amount of money they get is not even in line with inflation. This means that any money that they are saving is reducing in value which makes it feel not worth bothering with. There are some accounts though, which pay higher interest and bonds are one of these. They could provide a solution to those that want a higher return.

How do bonds work?

A bond works differently to a savings account. You buy a bond and then you normally have to hold onto it for a certain time period. Once that time has passed you will get interest on it and sometimes a bonus which usually add up to more than the interest rate on a conventional savings account. If you cash in the bond before the time period is up you will normally not get paid the bonus or get a lower interest rate or maybe no interest at all. The rules will differ between the different bonds and it is important to make sure that you understand how they work before you decide on whether you should take one up and which one you should choose.

How do they differ?

Bonds are issued by different places and therefore differ in the way that they work. Some bonds are issued by the government. These can either be fixed rate bonds, which will guarantee a certain interest rate as long as you keep the money in for a certain time period and they also issue premium bonds. These work differently as you buy entries into a draw and you get paid prizes if you win rather than any interest. This means that you could win a very large amount of money or you could win nothing at all. You can withdraw your money though without losing anything but you will no longer be entered in the draw. These prizes are free of tax because they are seen to be gambling, which is also free of tax.

You can also get bonds from private companies. These may work in a similar way, in that you will be able to get a bonus and interest if you leave the money in for a certain amount of time. The interest will tend to be higher than conventional savings and it will usually be higher than government bonds as well.

If you start looking at bonds you will find that they differ in a lot of ways. The amount of time that you need to tie your money up will differ but they will also differ in how much they pay out. You may also find they differ in how much you can pay in as well. Bonds will usually be worth a certain amount, perhaps £1,000 or more so you will need to have a lot of money to pay in normally. However, as they do all differ it is worth checking this out.

Are they right for me?

A bond can be a good idea for anyone that is hoping to get more money form their savings. The risk is low which means that you will get your money back and you should get the interest as well and a bonus if you make no withdrawals. However, you will have to prepared to tie your money up and this is likely to be for a minimum of a year and could be five years or even longer. You will therefore need to be sure that you have money that you can use that you will not need for anything else. If there is a risk that you will need the money, then it could be worth considering a different way to save your money. It can be hard to predict whether you will need your money during the course of the next year or even further ahead, however, if you have money saved elsewhere which you can get instant access to then this may mean that you will have enough to allow you to withdraw some if you need it without having to withdraw form the bonds.

Some people also do not like the thought of having government bonds. If they do not like the party in power or do not like the things that the government funds then they may feel that they do not want to buy bonds which will effectively lend the government money to spend on what they see fit. However, others may have a problem with buying bonds from financial companies that they feel invest in businesses that they do not like. Others, of course, may not really worry about things like that.

Should I Bother with Contents Insurance?

Should I Put my Savings into Bonds?