It's peace of mind. It protects your home and its contents against a range of perils such as fire, theft, flood and more.
A home insurance policy usually has to be renewed each year and can be paid for in one yearly lump sum or monthly.
Whilst it's not a legal requirement to have home insurance, if you have a mortgage it's usually a condition of your mortgage that you insure the building against what are called standard perils such as damage from fire, lightning, earthquake and aircraft although you should check your mortgage conditions to be sure exactly what cover is required.
Even if you aren't required to have home insurance it's a good idea as if the unexpected happens it means you aren't left to sort everything out by yourself such as repairing any damage and replacing items, and it also means you won't have to pay out as much as you would if you don't have home insurance.
Tenants don't usually need to insure the building as their landlord should do this, however tenants may still wish to protect their belongings so a contents insurance policy could be useful.
A type of insurance policy that pays out a tax-free lump sum in the event that an insured person should die during the term of the policy.
The recipients of the money from a life insurance policy, called beneficiaries (often the family of an insured person), often use the money to pay-off their mortgage, cover funeral expenses, inheritance tax bills and general household bills.
There is also a type of life insurance that pays out a monthly tax-free sum for a period of time instead of one lump sum. This type of life insurance is called family income benefit and is often used to replace the income of the insured person.
It's not a legal requirement to have life insurance and it's rarely a condition of having a mortgage that you take it out.
However it's a very good idea especially if you have a family that depend on you and your income. It would be hard enough to lose a loved one without the added worry of how the bills will be paid.
Life insurance won't help if you get sick, or if you suffer an injury and cannot work.
For these situations there is critical illness cover which, like life insurance, pays out a tax-free lump sum in the event of an insured person suffering one of a defined list of critical illnesses such as a heart attack, stroke, certain types of cancer or losing a limb. There are many more than those listed here.
But there are many more ailments, that whilst may not be critical, are certainly serious. For these scenarios there is income protection insurance. This pays out a tax-free monthly sum for an agree period of time or until you can return to work.