Protection is always a foundation of financial advice. Our focus is on what really matters which is protecting family life. The UK population is now so diverse that there is no standard definition of the traditional family anymore, so protecting it can also be so varied. What is important to one household is not important to the other and the family dynamic is constantly changing.
We appreciate that people like to think ‘it won’t happen to me’, and we understand that it is a difficult conversation to have, however it is an essential conversation to have in the financial planning process. People are often quite willing to spend money insuring pets, their boiler, their mobile phones or the fish in their freezer, yet have little thought to protect what is possibly most important; themselves and then their income. It is much more difficult to pay the household bills if you are too ill to work and this is why it is so important to consider.
Critical Illness Cover
The great news with advances in medication and technology is that more people are surviving critical illnesses. It could be suggested that the critical illness may not be the problem and that it is the recovery time which could be, which will no doubt lead to extended time off work.
We all dream of winning the lottery, even with odds of 14 million to 1, however when it comes to the lottery of life we don’t think critical illness will happen to us. The chances of a critical illness striking close to home are higher than many think:
- The average age of a claimant is 47 years for a critical illness payout and 42 years for an Income Protection payout*
- 97.8% of claims for Term Assurance, Critical Illness Cover, Terminal Illness Cover, Total Permanent Disability, Whole of Life and Individual Income Protection were upheld and paid**
- Over £13.9 million per day was paid out in protection claims in 2018 to help individuals and families cope with financial strains**
*Source: Legal & General – 2017 Claims Quick Stats
**Source: ABI – Protection Claims 2018
By taking out Critical Illness Cover, you can buy the time you need to recover without having to use up hard earning savings.
It is vitally important to protect your mortgage, but protecting this one debt alone might not be enough. The cost of bringing up a child must also be a consideration along with how the bills will continue to be paid if anything happened to you. And it is not just the breadwinner that you need to consider protecting as what would happen if the worst happened to the stay at home parent? How would any family cope financially with the loss of a parent? It does not need to be complicated with solutions easily affordable to make the financial issues on death a non-issue as let’s face it, the emotional burden would always be enough to contend with.
Life Cover can be setup to pay out a tax free lump sum or a regular benefit, often referred to as Family Income Benefit, and it can be based on a budgeted amount or a certain level of cover. It is not worth underestimating your own value, and for the sake of any family, it should be a priority.
If you were too ill to work, how would you afford to pay the mortgage / rent, utility and other bills, credit cards, groceries, the list goes on? Your employer may give you some sick pay, but how long would this last? There are state benefits, but how far would this stretch.
Income Protection can help if you can’t work because of illness or injury and it would provide you with a monthly income to help you and your family cover the essentials.
How can we help?
What we are able to do as Independent Financial Advisers is identify your own protection needs and guide you through the various types of cover available to help you get the right cover at the right price. We have access to underwriters at insurers and regularly discuss the merits of an application to see how each may view a certain disclosure.
You may be budget driven (e.g. £10-100pm) or looking for a certain level of cover. Either way we can help tailor a package that is right to you.
Please contact us on 01489 574355 or via the Contact page on our website, to arrange a free, initial no obligation consultation at our office in Park Gate, Southampton, Hampshire.
Protection policies do not have a cash value, unless a valid claim is made
Critical Illness policies may not cover all definitions of a critical illness, and the scope of coverage may vary from policy to policy. For full details regarding the terms of cover, including critical illness definitions, please refer to the Key Features document and Policy Documents