# Insurance: big losses first > What to insure, what to pay from savings, and how to read a deductible and an exclusion. - Course: [Personal Finance: Budget, Safety Cushion, Debt and Investing](https://productovi.com/courses/personal-finance.md) - Module: How to protect what you have? - Lesson 25/32, ~18 min - Source: https://productovi.com/courses/personal-finance/insurance-big-losses-first ## An offer at the checkout **Alex Tutor:** Back to Sam's family, whom you're still helping: Sam is at a shop checkout. **Sam:** I'm buying a 15,000 UAH phone. At the checkout they offered an extended warranty: 2,250 for two more years. “Screens break all the time,” the seller says. Worth it? **Alex Tutor:** First, one idea. Insurance means paying a small, certain amount, the **premium**, to avoid a big, uncertain loss. On average an insurer pays out less than it collects: it has costs and a profit to make. **Sofia:** So on average every policy loses money for the person who buys it? **Alex Tutor:** On average, yes. It's still worth it when the loss would hurt far more than the premium. Don't ask “can it happen?” Ask “could we pay for it ourselves?” **Alex Tutor:** Now the phone. In our example, one phone in ten needs a repair in a year, at about 4,000 UAH. The warranty covers two years. > **Exercise:** In this example one phone in ten (10%) needs a repair in a year, and a repair costs 4,000 UAH. What is the **expected repair cost over the two years** the warranty covers? In UAH. ## Four boxes for every risk **Alex Tutor:** So 2,250 for 800 of expected repairs: about 2.8 times more. A 4,000 repair would sting, but the family's 10,000 of savings covers it. That's what a cushion is for. **Alex Tutor:** Sort every risk by two questions: how big is the loss, and how often does it happen? Small and frequent: the monthly plan. Small and rare: the cushion. Big and rare: insurance. Big and frequent: change something so it stops. **Sofia:** What counts as big? **Alex Tutor:** A loss you can't cover from savings without new debt or months of hardship. With 10,000 saved and 56,000 a month coming in, a broken laptop isn't big. A lost income is. > **Exercise:** Match each risk of Sam's family with the way to handle it. ## The loss nobody insured **Sam:** We have no insurance at all. Not on the flat, not on us. **Alex Tutor:** Then start with the biggest one. If something happened to you, the family would lose 31,000 a month. **Term life insurance** pays the family a sum if the insured person dies within a set term. **Sofia:** How big should the sum be? **Alex Tutor:** A simple way: income to replace × 12 × years the family needs, plus debts, minus savings. Sam's family chose five years, time to rearrange home, work and childcare. Leave debts aside for now; savings are 10,000. > **Exercise:** Sam earns 31,000 UAH a month. The family wants five years of his income covered, has 10,000 UAH of savings, and leaves debts out for now. Using income × 12 × years − savings, what **life cover sum** does Sam need? In UAH. ## Two lines to read in any policy **Alex Tutor:** 1,850,000. In our example, 2,000,000 of cover for ten years costs 7,800 a year, 650 a month. Real prices depend a lot on age, health and the insurer: it's an illustration. **Sofia:** And his wife's income? The family needs it just as much. **Alex Tutor:** Right: 25,000 × 12 × 5 − 10,000 = 1,490,000. Both incomes carry the family. Earning less doesn't make the loss small. **Alex Tutor:** Before paying for any policy, read two lines. The **deductible** is the part of each loss you pay yourself. The **exclusions** list what the policy never pays for. **Alex Tutor:** As of September 2026, many Ukrainian home, car, life and accident policies exclude war risks, such as shelling or drones, unless you buy an option. Find that line before you pay. **Sam:** Our home policy, for our things and for flooding the neighbours, comes two ways: 1,500 a year with a 3,000 deductible, or 2,100 with 500. > **Exercise:** The home policy costs 1,500 a year with a 3,000 UAH deductible, or 2,100 a year with a 500 UAH deductible. The family has 10,000 of savings and has never made a claim. Which choice makes more sense, and why? ## Insurance and savings live apart **Alex Tutor:** The cheaper version saves 600 a year. Its extra 2,500 of deductible costs more only if you claim more often than about once in four years. And 3,000 fits in the cushion. **Sam:** An agent also offered a policy that “returns all your money in 15 years”. Life cover and savings in one. **Alex Tutor:** Such products mix two jobs and often do both worse: less cover for the money, a return that's hard to compare. Keep insurance for losses you can't afford, and savings where you see the rate and fees. **Sofia:** And if the job ends? Sam's contract is seasonal. **Alex Tutor:** That's the likeliest big hit, and no quote covers it: three months of Sam's pay is 93,000. Only a cushion protects against it, which is why it comes before most policies. > **Exercise:** **True or false:** a policy that “returns all your premiums after 15 years” is a cheap way to get both life cover and savings. ## Your turn: Sam's top three **Sam:** So what do we insure first? We can't buy everything. **Alex Tutor:** Rank by the size of the loss next to what the family can absorb, then check the exclusions and the monthly cost. **Sofia:** So the phone warranty goes to the bottom of the list. **Alex Tutor:** Yes. Write Sam's top three with a reason for each. Before any real purchase, check the current terms and your own situation: this is an example, not personal advice. > **Exercise:** Write Sam's top three protection priorities in order, with one reason each. Use the numbers from the lesson: 31,000 and 25,000 UAH incomes, 10,000 of savings, the phone warranty (2,250 for an expected 800), the home policy (1,500 a year with a 3,000 deductible, including damage to the neighbours' flat) and Sam's seasonal contract (three months of pay, 93,000, that no policy covers). > **Key ideas** > > - On average a policy pays out less than its premiums. Buy it where a loss would hurt far more than the premium. > - Four boxes: small and frequent → the monthly plan; small and rare → the cushion; big and rare → insurance; big and frequent → change the habit. > - The phone warranty: 2,250 for an expected 800 of repairs, about **2.8 times** more. A 4,000 repair fits in 10,000 of savings. > - Life cover sum: income to replace × 12 × years, plus debts, minus savings. Sam: 31,000 × 12 × 5 − 10,000 = **1,850,000 UAH**; his wife: 1,490,000. > - Read the **deductible** and the **exclusions**. Many Ukrainian policies exclude war risks unless you buy an option (as of September 2026). > - Keep insurance and savings apart. A job loss can't be insured in Sam's quotes: only a cushion covers it. > - Check current terms and your own situation; this is education, not personal advice. **Alex Tutor:** Next time: the loss that insurance never covers, money taken by a call or a fake link. - Previous lesson: [Case: "just buy crypto" vs a regular plan](https://productovi.com/courses/personal-finance/hot-tip-case.md) - Next lesson: [Phone scams: calls, codes and fake platforms](https://productovi.com/courses/personal-finance/fraud-calls-and-codes.md) --- Productovi Learning. Free, no sign-up needed to read.