Have you considered how you and your family would cope if you suddenly had an accident that caused you to be incapacitated, were diagnosed with a serious illness, or died an unexpected death?
Introduction
A recent study conducted by Legal & General discovered that one in five households have no savings, with the average household being only 24 days away from living on the breadline[1].
A further study, conducted by Royal London, found that 42% of people with a mortgage have no life cover in place, 71% had no critical illness cover, and 81% had no form of income protection[2].
It is easy to believe that certain events “will not happen to me”, and whilst we hope that they will not, we cannot predict the future. You are your most important financial asset, and if you lost the ability to work, you need to be confident that your existing savings would be enough to continue to pay for your bills and other essential living expenses. Your dependants could be left financially vulnerable if there is not sufficient protection in place.
There are many reasons as to why we lack sufficient insurance protection in the UK, but the most common reason people gave when asked why they had no personal insurance policies in place was because they did not think they could afford it; however, personal insurance is often more affordable than expected. For example, a standard life insurance policy for a healthy male aged 35, with a death benefit of £350,000 over a 30-year term, is likely to cost around £15 per month[3]. The cost will depend on how much cover is required and how long for, as well as what additional benefits and features you may incorporate into your policy. Premiums will also be affected by your personal medical history.
Consulting a financial planner before taking out a new policy can help you establish which benefits will be best suited to your needs, as well as how this can be achieved within your budget.
Which products are available to you?
If you are looking to ensure your family is financially secure in the event of a sudden loss of income, there are several products available:
- Life assurance – a life insurance policy which will pay a pre-set lump sum should you die within the agreed term of the policy.
- Critical Illness Cover – this can be as a standalone policy, or an add on to a life assurance policy, and will pay out a lump sum on diagnosis of a serious illness.
- Income protection – this will pay out up to 60% of your income should you become unable to work due to an accident or long-term illness.
- Family Income Benefit – this will pay a regular income to your family should you die within the agreed term of the policy, for the remainder of the term.
Note that you can also incorporate several different features and options into these polices to tailor them to your needs.
Why do you need a financial planner to assist with this?
It is possible to arrange your own personal protection insurance; however, due to the complexity of these policies, and the wider financial planning considerations, it could be preferable for you to seek professional financial advice.
A financial planner can help you to break down your exact protection needs to determine exactly how much cover you require, how long for, and what can be achieved within your budget. They can have access to the entire insurance market and, can therefore, compare more products than you can access via comparison websites. As a result, they can find the most suitable solution for you, at the best price.
Additionally, as they have a direct relationship with the providers, they can ensure your application is dealt with efficiently – rather than you having to contact providers directly.
While the application process can be complicated, a financial planner will guide you through this to ensure it is accurate. This is important, as any incorrect information given could result in future claims being deemed invalid.
As part of a wider financial planning discussion, they can also advise you on the best ownership structure of your policy. For example, you may benefit by placing your policy into trust.
Can we help?
It is important to consider your own financial security to protect yourselves and your dependants if the worst were to happen. Hopefully this article has given you an insight into the different policies that are available and how consulting a financial planner can help with bridging that gap.
Lucas Fettes Financial Planning can work with you to find suitable solutions to meet your requirements. We will prepare a bespoke plan that is tailored specifically for you, which can incorporate other financial planning considerations that you may need to address, such as retirement planning.
If you would like to discuss the different products that are available, or if you wish to arrange an initial no cost, no obligation, consultation, then please fill out the contact form below. Alternatively, you can call 01603 706 820 or email info@lffp.co.uk.
Important information
This is solely for informational purposes and nothing in it is intended to constitute advice or a recommendation. While considerable care has been taken to ensure this information is accurate and up-to-date, no warranty is given as to its accuracy. This article constitutes a financial promotion.
[1] Legal and General, Deadline to Breadline Report 2020, Legal & General Assurance Society Limited, November 2020, deadline-to-breadline-report-2020.pdf (legalandgeneral.com).
[2] Kyriakou, Simoney, Eight out of 10 mortgage holders have no income protection, Financial Times, 25th May 2018, Eight out of 10 mortgage holders have no income protection – FTAdviser.com.
[3] Assureweb quote iPipeline – Services Information (assureweb.co.uk).
