There are a number of policies you can take out to protect you and your family against the financial ramifications of the unexpected such as loss of income, accident, death and illness. Yet, in today’s particularly austere times, many Brits, in a bid to save money, are “hunkering down” and foregoing what are important insurances, typically seeing them as luxuries rather than essentials.
While this mentality is understandable, sadly, if disaster does strike, these families could be left high and dry financially, especially as family savings may have been run down during the recession
There are a number of insurance options available in terms of products, as well as prices, meaning that even those on a tight budget can find cost effective cover that will give them peace of mind and a financial safety net in the event that the unexpected does happen.
Income protection insurance
Income protection insurance has been described by Which? magazine as “a must-have insurance for most working adults”. And no wonder. Imagine what would happen if you lost your income due to accident or prolonged illness. How would you manage without it?
While government support may be available, typically this is very limited (around £5,200 a year) and will not be enough for the average person or family to live on. Company sick pay schemes will not pay out for ever (if you are lucky enough to be part of one). Nor will any hard earned savings last.
What does income protection cover do?
In a nutshell, in the event of a successful claim:
- the insurance will pay out a tax free cash amount every month;
- this will be paid until you get back to work or for an agreed period of time (which can be anything from 12 months up to retirement age, depending on the type of policy you choose).
With the shorter term income protection policies (which typically run for 12 – 24 months) there is often the option to add in cover against involuntary redundancy, too.
There are also other products within the income protection insurance range that are designed to cover a specific debt, for example, MPPI (mortgage payment protection insurance), which is a short term policy which pays out for up to 12-24 months in the event of sickness, accident or forced redundancy.
Protecting your loved ones’ future
In the event of your premature death or a critical illness which leaves you unable to work, the last thing you would want is your loved ones struggling financially at an already devastating time. This is where life insurance and critical illness can be so valuable, paying out a lump sum should you die or suffer from a serious illness.
This amount can be used to clear any outstanding debts such as a mortgage or credit card bills.
Even if you are not the main income earner, you still need to think about what would happen if you die or became critically ill – child care costs would need to be covered, for example, if you are a home maker.
There are a number of life insurance solutions, with optional critical illness cover if required, making it an affordable way to ensure that family life will go on after your passing or serious ill-health.
Family private medical insurance (PMI) is an affordable way to ensure that you and your family get immediate medical help in non-emergency situations such as consultations or non-urgent but essential surgery.
PMI is no longer the domain of only the affluent; there are a number of private health insurance options to suit all budgets, meaning you can access the best of care for you and your family when you need it.
This is not about queue-jumping the NHS, but more about getting treatment quickly, potentially meaning less time off work or away from school / university.
In summary, protecting your finances and the health of your loved ones need not be expensive or a luxury. In today’s modern world, they may be considered essential.
This is guest post by Tom Conner of Drewberry Insurance, the independent insurance advisers for income protection and life insurance.