The importance of protection insurance
In these uncertain times it is logical to review all financial outgoings. However, one area that shouldn’t be cancelled is your insurance or income protection.
There may be times when you think it may be worth saving a few pounds a month, but in these uncertain times, it is vital to protect your income and lifestyle. Ask yourself, what would happen if the worst was to happen? How would you cope if you became critically ill?
Your chance of getting a critical illness during your working life is six times higher than your chance of dying. This might be a surprise to you, but it might be less surprising to hear that the likelihood of you getting some critical illnesses increases with age.
If you are looking to cut expenditure, it may be advantageous to drill deeper into your outgoings. Cancel your TV, your magazine subscriptions or cut back on some of life luxuries – but please think carefully before cancelling your insurance.
Here’s a few stats for you to remember:
- The average UK resident has enough savings to cover their outgoing for 32 days if income stopped.
- One-third of UK adults would not be able to cope with an unexpected shock or loss of income, while a quarter have no savings to fall back on (Zurich UK, 2018).
- 1 in 2 people will get cancer at some point in their lives.
- Every 30 minutes, a child or young person will suffer a brain injury (Child Brain Injury Trust).
- Statutory Sick Pay is just £94 per week – payable for a maximum of 28 weeks.
If you’re in doubt, please consider the type of insurance available:
Life & Critical Illness Cover
With a Life and Critical Illness, you were diagnosed with a serious illness you would receive a lump sum if you were diagnosed with a serious illness. Crucially some clients misinterpret difference between Critical Illness and Terminal Illness so are unknowingly drastically under insured.
Income Protection
If you are off work long term, then that may put your home at risk. An IP policy will provide you with a monthly tax-free sum of your choice that would cover your outgoings once your normal income ceases.
Family Cover
If you have a family that rely on your income, then is important. A Family Income Benefit policy is designed to provide your family with a tax-free monthly income in the event of you passing away or becoming seriously ill.
The impact of Covid-19
Government predictions suggest that up to 250,000 people in the UK may die from Covid-19 – a staggering and unthinkable number.
Reports also suggest that the virus could continue to infect people for the next 18 months – so please, if you have insurance in place don’t annul it.
The good news is that many protection providers do not exclude Covid-19 from their policies. This means, if the worse was to happen as a result of a related illness then you are likely to receive a payout from your existing policy.
Why not use this time to review your protection?
Insurance gives you peace of mind that in the event of unforeseen circumstances, such as unemployment and illness, your dependants have the necessary financial protection in place. It is important to consider what kind of protection you might need and to review this on a regular basis.
If you are in good health it may be worthwhile reviewing your protection. Ask yourself, when was the last time you reviewed it? Have your circumstances changed (e.g. has your family grown, have you started a new job, or have you moved to a new house?
Perhaps you have employment benefits, such as sick pay, or death in service which could help make things a bit more comfortable for you. However, you may find that this isn’t enough to sustain your current standard of living. If this is the case, it’s important you talk with a broker who can tailor the cover around your personal circumstances factoring in your employer benefits.
For the 5 million self-employed in the UK, with no employers offering support, it is important to understand your options.
When reviewing your premiums – consider these hints and tips:
- Buy the right cover for your circumstances. For example – what type of cover do you need, how much and for how long.
- Get healthy. Some providers will reward you for staying fit.
- Buy soon. As you get older, polices can get more expensive.
- Ensure you have a 5-star Defaqto rated product.
- Cover can be tailored around budgetary requirements.
- Use a broker. As one of the largest brokers in the UK, we have access to many exclusive products. Talk with one our team now for a free review…