Updated 1/4/21
It is a sad fact that while most of us are quite happy to insure our car, our house, our travel arrangements and even our mobile phones to their full value, few of us take as much care over our own health and that of our loved ones.
According to figures produced by the Association of British Insurers (ABI), 19.7 million of the UK’s 27.2 million households had contents insurance in 2016, whereas only 5 million had whole-of-life assurance, 0.5 million had term life insurance and only 0.3 million had
income protection insurance.
It is true that not everyone needs cover. Life insurance, for example, pays out a lump sum on death. For a family with small children, the need for this cover is obvious. Remove the family’s main breadwinner, for example, and it would not take very long before the financial
stability of the family was seriously affected. Remove the primary carer, and a replacement needs to be found.
However, if you are single and have no financial dependants, you might consider it a waste of time leaving a lump sum that is unnecessary and will just cost you money to fund. Nevertheless, if you are single, you should still consider what would happen if you fall ill or
have an accident and are unable to work. The state benefits available are only intended to provide a safety net. They will not help you keep up a lifestyle of holidays and eating out, or make any inroads into repaying a mortgage.
Therefore, before you make any decisions, you need to look at your own situation. Some of the following question may help you to start prioritising what is most important to you:
Do you have young children or others who depend on you financially?
How old are your dependants?
Will your dependants be heading to university?
Do you pay school fees or nursing-home fees for others?
Will any current dependants become financially independent and if so, how soon will that be?
Do you have debts (including a mortgage) that your beneficiaries could not manage, even if it were only for a short time?
Do you have investments that might provide an income if you were unable to work?
Do you have any assets that could be sold if you were unable to work?
Would you need to move house if you were less mobile?
How do you travel about?
How far are you from friends, relatives and local amenities?
Contact us if you'd like to arrange a review of your protection needs. Following a review we can help you put a robust protection plan in place, if necessary.
Content courtesy of Adviser-Hub, checked for accuracy by Culverhouse Financial Planning Ltd.
The article outlines just some of the things you could consider in relation to income protection. It does not represent financial advice. If you would like personalised financial advice please contact a financial adviser.
Remember that the value of investments can fall as well as rise and past performance is not a guide to future performance.