Do you have adequate protection cover in place?
In the same way that you’ll insure your home, car, pet, and mobile, make sure you apply the same principles to both yourself, and your immediate family.
As part of a Spring Clean of your existing (or potential) Protection needs, we can also assess what’s on offer from your employer, as well as any limited support (if any) from the state.
Protection cover options
As part of this process, we’d highlight that there are numerous protection products out there to help provide cover should you suffer a life-threatening illness, or a mental health problem, and be off work for a long period of time.
This issue impacts a sizeable number of people when you consider that almost 2.5 million are currently off work due to long-term sickness.
(Source: Office for National Statistics, Labour market overview, February 2023)
The likelihood of these events occurring will be more likely in the working lifetime, than an early death, so it’s important to consider some degree of cover. One option might be a stand-alone Income Protection policy, or perhaps consider Critical Illness Cover as an add-on to Life Cover.
These policies are important, as they will deliver a degree of funding (if your claim is successful), giving you valuable breathing space whilst you focus your energies on recovery, ahead of returning to work.
Life Cover
Conversely, if you die, you get no second chance to rebuild your finances for the family, so it’s essential that you also consider having an element of this cover in place.
The likelihood of death up to the middle part of your working lifetime is less likely, but it’s still a possibility when you consider that, on average, around 50 people day die every day, who are aged 18-44.
(Source: Office for National Statistics, Mortality data for 2020, released January 2022)
Trusts
Once you set up life cover, it will be beneficial in most cases to place it in Trust. This should help to ensure that at a bad time for the family, the beneficiaries will see a swift payout.
If you have Children
Family Income Benefit is an alternative (or additional) type of life cover to consider, if you have young children.
Whilst you may have normal life cover in place to help pay off the mortgage, what about the everyday items such as food, clothing, utility bills, fuel and other expenses such as a new car, or holiday?
This where Family Income Benefit could help, as this, generally lower-costing product, is designed to pay out until the children have grown up. This means it’s
normally taken out over a limited time period of, say, a 10-20 year term.
If you claimed in the first year, then it would provide a monthly payment until the end of the policy period. Alternatively, if you claimed with two years left, then it would simply pay out for the last two years, or not at all, if there was, fortunately, no claim made.
As with all insurance policies, terms, conditions and exclusions will apply.
