Debit Cards V Credit Cards
When you’re under 18, you’re lucky! You can’t get into trouble with credit cards as you are under the legal age! But a lot of young people are encouraged to get credit cards when they turn 18! Beware as misuse of a credit card is one of the easiest ways to get into debt.
Let’s first look at the differences between the two. A debit card gives you access to your own money, so you are limited to withdraw or spend only as much as is in your account. When you turn 18...
Talking the talk
Insurance sure involves some weird and wonderful ideas you may not have heard of before. Check them out…
Insurance Policy
Insurance is sold as a policy. A policy is a list of rules and conditions that define what kind of accidents and damage the insurance will cover. You should always read your policy and make sure you understand what's covered and what's not before you buy.
Insurance Premium
Your insurance premium is what your policy costs. Normally you buy insurance in yearly cycles, so your premium will be one annual payment. If you have problems getting that much money together all at once, some insurers will let you divide it up and pay monthly.
Claim
When you crash your car or your house burns down, it's time to claim on your insurance policy. Lodging your claim will involve filling out some forms to describe the accident, the damage that occurred to your property and perhaps some quotes for what it will cost to fix everything. You then submit your claim to the insurer who will check that your policy covers the damage and decide how much they'll give you to fix up the whole mess.
Excess
Sometimes you'll have to pay an excess when you make a claim. This is an extra amount of money on top of your premium.
Some excesses are mandatory, for example on most car policies there is an excess for drivers under 25, because this group has less experience on the road, and is considered more likely to have an accident.
Other excesses you can choose for yourself. Many insurers will give you the option to reduce your annual premium by increasing your excess. This means you'll only pay more IF you have an accident and make a claim. Again it all comes back to risk.
Sum Insured/Maximum Cover
Your insurance policy is not a gateway to millions of dollars. There is a limit on what you will be paid if your property is damaged, and this is outlined in the maximum cover details of your policy.
Sum insured is what the insurer considers your car, home or possessions will cost to replace. It is important to remember that insurance only replaces what you had, up to the value of the damage caused. So insurance is not about helping you get ahead – it is for restoring you to the stage you were at.
So if you crash your $3000 car into a pole and need to replace it, you won't be upgrading to a Porsche with your payout. Or if the insurer decides the damage can be fixed, you'll get money to cover the repairs only.
Renewal
When your annual insurance cycle is finished, your insurer will send you a renewal notice. This is really a reminder and a bill for the next year's premium. If you pay it your cover will continue uninterrupted. This is also an ideal time to shop around for a new policy to see if you can come up with better or cheaper cover.
Always pay special attention to the date your renewal payment is due. If you miss it and have an accident in the meantime, your insurance won't pay.
Lapse
If you don't pay your renewal on time your insurance will lapse. This means your policy is out of date and you are no longer covered.
Exclusions
It's pretty important to pay attention to the exclusions on your policy. These are specific types of damage and circumstances that will not be covered. For instance some natural disasters eg. flood, are excluded from many home insurance policies.
Now you can talk the talk it's time to investigate the different types of insurance available, starting with something that's bound to interest you... your car insurance.
