Life’s Unpredictable Be Protected

Life is unpredictable. We must make sensible choices to mitigate the risks that surround us – and although some things are beyond our control, certain financial safeguards can be made quite easily. For most curveballs that life can throw at you, there is an insurance plan that can financially help you and your family.

A million people find themselves unable to work due to serious illness or injury in the UK each year. This year more than 200,000 have been made redundant. To cover your finances in difficult times below we will look at 3 common types of covers that you should consider if you haven’t already got them.

How to decide…

Firstly, you need to fully understand the risk that you are trying to mitigate – so as difficult as it may be, try and imagine the situation you’re covering

and think of everything that you’ll need in that situation. For instance, for life insurance, consider what your income means to your household, what expenses will need to be covered on a long-term and short-term basis if you weren’t around. Similarly, for income protection, imagine you have zero income and make a list of essential expenses.

Then, make sure you get your insurance through a reliable broker and check the terms and conditions of the policy very carefully. You need to ensure all your requirements are met and know exactly what you pay monthly and what you to expect if a claim was to be made.

Do check for exclusions in the policy for pre-existing medical conditions. Lastly, there may be a waiting period for payments, so make sure you are aware of this time frame.

Illness, redundancy, and death, are all realities. How would your dependents cope if you found yourself seriously ill and unable to work or if you passed away unexpectedly? Who would pay the bills if you suddenly lost your job? Don’t put yourself at risk when there’s protection available.

Life

Life insurance is designed to provide you with the peace of mind that your dependents will be looked after if you were to pass away. It can pay your dependants as a lump sum or as regular payments.

The amount of money paid out obviously depends on the level of cover you go for, and you can decide how it is paid out and whether it will cover specific costs, such as mortgage or rent etc.

If you have a mortgage – which, in most cases is the biggest financial commitment you’ll have, you can also look into Mortgage life insurance (also known as mortgage protection) which is a type of life insurance that pays off your mortgage if you die – this is tied into your mortgage, so the amount covered decreases as you pay your mortgage off, which makes it a cheaper form of life insurance.

If you have a family and your household relies either solely or partly on your income you must seriously consider life insurance.

Income

Income Protection policies are designed to support you if you are unable to work due to accident, injury, sickness or if you lose your job through no fault of your own. The policy pays you a regular income if you can’t work, usually in monthly payments of about half to two-thirds of your monthly income.

You might be prone to invincibility syndrome and think you don’t need this cover, but common sense would dictate to always have a Plan B and consider income protection. If for any reason you are out of work with zero income, how long can you sustain yourself? How long until it becomes impossible to pay your bills, mortgage, and other expenses and maintain the lifestyle you currently have? A backup plan would be a practical decision to make.

There are two types of income protection policies, ones that can go indefinitely until you can return to work and others that cover you for a fixed period (usually 12 to 24 months). There’s often a waiting period before the payments start so you need to bear that in mind and make sure you have savings to cover you for whatever that period is for your policy.

You should definitely have this if your household relies solely or partly on your income. It’s an absolute must if you’re self-employed.

Critical Illness

Critical illness cover/insurance is a policy that covers specific serious illnesses listed within the policy, which most prominently include Stroke, Heart Attack, certain types and stages of Cancer, Multiple Sclerosis and may include permanent disabilities as a result of injury or illness.

If you get one of the listed conditions, the policy will provide a tax-free lump sum – this can help pay for your usual expenses and any other costs associated with the illness.

It is important to recognise that there is some overlap between Critical Illness Cover and Income Protection – therefore speak to a credible broker when applying for these policies to make sure you get the level of cover that is right for you.

You might want to consider Critical Illness in addition to income protection if you do not have savings to help you through a serious illness, if you’re self-employed or if your employer’s sickness pay does not provide sufficient cover.

Which insurance?

Below are some questions you should ask yourself to help determine what level of protection you need.

1) Is your family solely or partly reliant on your income?

2) What would things look like if you were unable to work?

3) If you’re employed, is your sick pay enough to help survive a serious illness or injury?

4) If you’re self-employed what would it mean for you if you’re unable to work due to an illness or injury?

5) Do you think government support could help you get by in a period of unforeseen redundancy or an in case of an accident or serious illness?

6) If you got run over by the bus tomorrow, how would things look like (financially) for your dependants?

How to decide…

Firstly, you need to fully understand the risk that you are trying to mitigate, so as difficult as it may be, try and imagine the situation you’re covering
and think of everything that you’ll need in that situation. For instance, for life insurance, consider what your income means to your household, what expenses will need to be covered on a long-term and short-term basis if you weren’t around. Similarly, for income protection, imagine you have zero income and make a list of essential expenses.

Then, make sure you get your insurance through a reliable broker and check the terms and conditions of the policy very carefully. You need to ensure all your requirements are met and know exactly what you pay monthly and what you to expect if a claim was to be made.

Do check for exclusions in the policy for pre-existing medical conditions. Lastly, there may be a waiting period for payments, so make sure you are aware of this time frame.

Illness, redundancy, and death, are all realities. How would your dependents cope if you found yourself seriously ill and unable to work or if you passed away unexpectedly? Who would pay the bills if you suddenly lost your job? Don’t put yourself at risk when there’s protection available.

Please Note: This is an opinion-based generic article, it does NOT intend to advise you regarding insurance.

Please contact us to get bespoke advice about your insurance/protection needs.