Nobody likes to think about the worst happening but the truth is, we’ll all hit a bump in the road at some point. We can’t predict what will happen, or when, but we can create our own financial safety net to protect us if we do suffer a stroke of bad luck.
It’s important to think about the consequences of a turn in fortunes, and how you would cope. For example, if you became sick or injured, how would you meet your monthly financial commitments as you recover? What about any medical bills you incur?
There are a number of financial products available that cater specifically for your security in times of need. And with almost a quarter (23%) of people in the UK admitting their savings wouldn’t last them more than a couple of months if they weren’t able to work, according to a study by Scottish Widows, it’s important to look at longer-term means of income protection.
Here are some of the options available:
Income protection
Taking out an income protection policy can ensure that, even if you weren’t able to work, you could maintain your current lifestyle. It protects you in the event of a number of circumstances including illness and unemployment, and can provide you with up to 70% of your usual salary.
It’s generally thought of as the most comprehensive form of accident and sickness cover, and is paid on a monthly basis until you are able to return to work.
Critical illness cover
Similar in principle to income protection, critical illness cover is available specifically to support you if you are unable to work due to illness or injury. But rather than pay you a monthly figure, as would happen with income protection, it provides a lump sum and then it’s your job to decide how best to use the funds.
That lump sum will be decided when you take out the policy, which will only be redeemable if you suffer from one of the critical illnesses named within the policy you select.
With both income protection and critical illness, standard policy procedure is that you cannot make a claim for a period at the beginning of your contract – so make sure you know your entitlements from the start.
Life insurance
It’s hard to think about what will happen to your family in the event of your death, but protecting loved ones is an important consideration. Taking out a life insurance policy is one way to make sure they are financially secure, even if you are not around to provide for them.
If you have dependents, this really is something to look at quite urgently – how would your partner or their guardian keep paying the mortgage if you weren’t there to contribute? How could they cover the utility bills, or afford the weekly grocery shop?
Even if you’re a stay-at-home parent, it’s still important to consider the contribution you make to the household in terms of childcare and support. In your absence, your young ones may have to go to a childminder or nursery, and that adds up.
It’s always best to have these conversations with financial experts while you’re fit and healthy, as they can help you put the best policies in place to safeguard your future when you’re in a good state of mind.
Then, even if the worst happens and your circumstances change overnight, you know you’re financially protected – which is one thing less to worry about.
If you’re unsure about how best to protect your loved ones if anything happened to you, contact our life insurance team today.
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