Why insurance matters: everything you need to know for peace of mind

Insurance is designed to protect us from events that could undermine our financial stability: illness, an accident, property damage, or a reduced ability to work. In practice, however, many people hold coverage that does not suit their current personal circumstances.

• Overinsurance (duplicate coverage): Single people without children sometimes pay for coverage intended for families, such as a high amount of life insuranceProvides for payment of a sum of money to beneficiaries in the event of the insured person’s death. or survivors' coverage in a pension fundA savings vehicle based on mutual risk sharing that includes insurance coverage in cases of disability or death..
• Underinsurance: Families with children and a mortgageA long-term loan for purchasing a property, with the property serving as collateral for the bank. may not have enough insurance for a sudden loss of income.
• Gaps in coverage: Automatically renewing car or home insuranceIncludes building insurance (for the structure of the home) and contents insurance (for the property inside the home). without reviewing it may leave you without coverage for common damage, such as windscreens, mirrors, or plumbing, and lead to heavy out-of-pocket expenses when it matters.

Reviewing your insurance periodically lets you make sure the coverage suits your current stage of life and provides protection where it is truly needed.

The main problem with insurance is that its quality is measured only during a crisis. Common mistakes that can be prevented in advance include:

• Buying insurance that does not cover the main risk: Focusing on "small," inexpensive policies instead of catastrophic risks.
• Not understanding the policy termsThe legal contract that sets out the insurance terms, coverage, and exclusions.: Not knowing when the insurance company is exempt from payment (exclusions).
• Canceling too hastily: Switching policies without thoroughly checking insurance continuityMaintaining continuous insurance coverage when switching between policies in order to avoid a new waiting period. or waiting for final approval from the new company.

Insurance expenses—health, car, home, life, and disability income insurance—are a fixed part of the household budget. They amount to hundreds or even thousands of shekels a month. Over decades, managing the portfolio properly—comparing prices, canceling duplicate coverage, and updating coverage as you age—can save you tens of thousands of shekels without compromising your financial protection.

Managing insurance is not only about price. It also means answering difficult questions in advance:

• Would the family be able to maintain its standard of living if one of the breadwinners died?
• Do we have a source of funding for expensive medical treatments that are not included in the public health basket?

Addressing these questions allows you to make considered decisions and genuinely protect your future.