You have been working a while, people around you start talking about insurance, and then you look and there are a dozen kinds of plan and no idea which to pick up first. This article walks through it in order, to find the first policy that genuinely fits your life.

Start with the question: which risk would hit you hardest?

Before looking at any plan, look at your own life. If you had one serious illness, how badly would the treatment cost hit your savings? If your income stopped, who would be in difficulty? The answers to those two questions point to which kind of cover to start with.

General thinking for someone starting out

For a single person with nobody depending on their income, the risk that hits hardest is usually medical costs, so health or accident insurance is often considered first. For someone with people behind them — parents to support, or a mortgage to pay — life cover carries more weight, because if something unforeseen happens, those people still have security. There is no fixed formula; it depends on each person's situation.

Set a premium budget you can sustain for the long run

Insurance is a long-term contract. The right premium is one you can keep paying without squeezing your essential expenses. One common approach is to set aside a proportion of annual income for total premiums across all policies, then increase it gradually as income grows. Starting small and continuing beats starting large and having to abandon it halfway.

What to read before you sign

  • The main cover: what it includes and the limits
  • Exclusions and waiting periods
  • The premium payment term and the cover term
  • Renewal conditions, especially for health insurance

An hour of reading today beats being baffled by the conditions on the day you need to claim.

Build it up one policy at a time

A first policy does not have to cover everything. As life changes — marriage, children, higher income — review it and add the cover that is missing. Reviewing the plan each year, or whenever something major happens, keeps your cover in step with your life.

In short

A good first policy is the one that answers your hardest risk today, at a premium you can afford tomorrow. If you are still hesitating, describe your situation to whoever looks after your policies and compare more than one option before deciding.