Have you got the right protection in place to protect your finances now and in the future?

In recent years, people around the world have had their lives altered by events beyond their control.

The Covid-19 pandemic arrived unexpectedly, sadly causing the deaths of more than 100,000 British people. You might have had to consider what might happen if you were to lose a family member, or if you passed away yourself.

Even aside from the pandemic, now is the time to consider investing in financial protection. According to research published in 2021, only 26% of UK adults have life insurance – and 12% have no insurance at all.

Read on to find out three types of risk you and your family could encounter, and some financial protection options that could be life-changing – plus, why working with a planner can help you ensure your assets are protected.

3 types of risk you and your loved ones might face, and how financial protection could help

  1. You could pass away unexpectedly

It can be difficult to consider these things, but have you ever paused to think about how your family would be able to maintain their current lifestyle if you were to pass away in the near future?

The Covid-19 pandemic taught us that even healthy young people can pass away from unexpected illnesses or accidents.

With a life insurance policy in place, your family could receive a payout in the event of your death, that could help them to:

  • Continue paying the mortgage on your home, meaning they may not have to uproot their lives if you passed away
  • Cushion the hit of an Inheritance Tax bill
  • Cover living costs such as school fees, travel and day-to-day expenditure.

Despite the amazing benefits life insurance can bring, according to a 2021 study by FTAdviser, many Brits reject life cover because of two key myths: it’s “too expensive” and “unreliable”.

However, according to Unbiased, the average monthly cost of life insurance in the UK is between £15 and £30, depending on the type of cover you choose and your individual circumstances, such as your age, health status, income and asset value.

This data points to one simple conclusion: life insurance can be highly affordable and reliable.

Your planner might recommend life insurance to you, as it could act as a significant element of protection that may shore up your family against financial difficulty in the event of your death.

Speak to your financial planner if you would like to learn more about how to minimise risk by looking into protection options.

  1. You become critically ill

According to UK insurer Aviva, more than 3 million people aged between 35 and 49 have a health condition that may last more than a year.

Furthermore, the same study revealed that more than 100,000 people in the UK aged between 35 and 60 were diagnosed with cancer within a one-year period. If you were one of those 100,000, could you keep supporting your family, even if you couldn’t work for a number of months or years?

Despite the increasing prevalence of serious illnesses, only 7% of Brits have critical illness cover.

Critical illness cover helps to provide a lump sum for those diagnosed with serious illnesses or disabilities that prevent them from working, such as cancer or a stroke.

A one-time tax-free payment is made to you if you successfully make a claim, which can be used to supplement your income during your period of illness.

As of March 2021, Statutory Sick Pay (SSP) stands at £96.35 a week. Even if you have a health insurance plan through your employer, this might be limited to a number of weeks or months and could run dry in the event of a long-term illness.

Critical illness cover could provide the support you need, so you can keep your personal finances protected even in the event of a life-changing diagnosis.

  1. An injury or illness could stop you from working altogether

Most people work to sustain their income, providing for themselves and their family in the process. Your home, belongings and experiences, such as travel, all rely on you having an income that can give you the lifestyle you want.

If you became injured, were diagnosed with a disability or experienced another life-altering event that stopped you from working, could you continue to provide yourself and your loved ones with the lifestyle you love?

Even if you could stand to lose a few luxuries in your life, foundational assets, such as your home, could be at risk if you don’t have a financial cushion in place for circumstances like these.

Monthly mortgage repayments are the biggest household expenditure in the UK, according to Compare the Market, accounting for approximately 18% of combined household income or 24% for London homeowners.

If an illness or injury stopped you from being able to work, could you keep up your mortgage repayments for a long period of time?

Even if your savings could cover your mortgage for a while, income protection insurance could prevent you from depleting your hard-earned savings.

This type of cover could provide you with a steady income while you are unable to work, allowing you to continue supporting yourself and others without adding stress to your situation.

If the unexpected were to occur, this type of cover could be the difference between having to sell your home and having your assets protected.

Working with a planner can help you find the right protection

The good news is, there have never been more financial protection options available. You can choose from a wide range of choices that could bring you valuable peace of mind in these trying times.

However, a wide array of choices means it could be difficult to assess what kind of protection you need. Your financial planner can provide professional insight into the kind of cover that might be right for your family, your age and your portfolio of assets.

Get in touch

If you have questions about financial protection and want to learn about the options available, reach out today. Email enquiries@bowmorefp.com or call us on 01275 462 469.

Please note

This article is for information only. Please do not act based on anything you might read in this article.

Bowmore Financial Planning Ltd is authorised and regulated by the FCA.

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