Valuing Protection
Valuing Protection
We can confidently say that 2020 has demonstrated that we can never be sure what’s waiting for us round the next corner; and even prior to the COVID-19 outbreak there will have been many of us who have known someone to die young or experience a battle with serious illness. It is during these times that the financial consequences of such events make their impact all the more difficult to bear. Whilst Protection Insurance cannot stop these events from happening, they can make dealing with the consequences a little more tolerable.
Many of us will already have some form of life cover in place, to repay a mortgage liability for example. But is that enough? It is also crucial to give consideration to any liability, from credit card balances, personal loans and other debt to more personal objectives such as funding children’s education.
The TUC estimated that the average unsecured consumer debt for Q3 2019 was £14,540 and the repayments now represents 27.5% as a share of household income. How might these be repaid?
It is also important to consider the implications of the loss of income due to Critical Illness or sickness. Between September and November 2019, the ONS estimated that 2 million people of working age were unable to work due to long-term sickness. Unless there is a suitable policy in place, how long will a household’s Emergency Fund be able to meet regular expenditure.
When identifying the need for Protection Insurance, the following are of particular importance –
- Your liabilities – secured and unsecured.
- Your income and expenditure – what protection is affordable
- Are there specific financial goals that you would want to be fulfilled in the event of your death
- What benefits your Employer provides
There are a broad range of policies that are designed to meet varying circumstances and recognising the most appropriate policy can often be complicated. Financial Advisers can play an important part in this process, ensuring that the correct policy meets the appropriate protection need at the most competitive and affordable cost.