Why should you invest in protection?

Why should you invest in protection?

Protection is a term that includes many services, including life assurance, critical illness cover, income protection, whole of life insurance and over 50’s cover. To us, protection means long term financial security for our clients.

Every 2 minutes someone in the UK is diagnosed with cancer (Cancer Research UK)

How many days are you and your family from the “breadline” if you were unable to work because of illness or injury?

Research undertaken by Legal and General has revealed that the average household is only 24 days from the “breadline”, far less than the 90 days people generally believe they have, with the average household having £2,729 in savings.

It is unsurprising therefore that almost half of all UK households believe that losing their income is one of their biggest worries if they are unable to work. It is more surprising however that 9 in 10 people do not see themselves as their largest financial asset and that UK households are 4 times more likely to insure their pet than their income.

Income protection policies provide a tax-free monthly income in the event you are no longer able to work through ill-health or injury. Whilst sick pay from your employer may help you at first, when that comes to an end an income protection policy aims to help you maintain your lifestyle and enable you to continue to support your family. Income protection should always be tailored to the individual’s specific needs, for example, someone who is self-employed will often need the protection to pay out sooner after suffering an illness or accident because they will not have any sick pay from an employer.

There is an admission to hospital because of a heart attack every 5 minutes (British Heart Foundation)

Nobody likes to think about serious illness or accidents, but the in the UK the numbers suggest that we all know someone who’s been affected:

  • Every 2 minutes someone in the UK is diagnosed with cancer (Cancer Research UK)
  • In 2019/2020 38.5 million working days were lost in the UK through illness or accident (Health and Safety Executive)
  • Every 22 minutes someone is killed or seriously injured in a road accident (Brake)

What are the financial implications for you and your family?

The average UK weekly expenditure to run a home in 2020 was £587.90 (ONS), That’s more than £2,500 a month. If your income was lost through accident, sickness, or death, how would your family manage and how long would it be before your savings were exhausted? 

Many homeowners have protection designed to repay their mortgage in the event of their death, but what about monthly outgoings in addition to mortgage payments? If you or your partner does not currently work or works part-time in to look after children, what would happen if the main earner were to die or became seriously ill?

This is why it is so important that you regularly review the protection in place for you and your family, including ensuring that they will be financially secure in the event of your death, illness or injury. 

Advances in medicine thankfully mean that more people survive even serious illnesses, for example, 1 in 2 people are still alive 10 years after a cancer diagnosis (Cancer Research UK). However, treatment and recovery periods for serious illnesses are often prolonged and can cause severe financial pressure and anxiety at an already very difficult time. 

Critical Illness Cover is a potential solution, paying out a lump sum in the event of diagnosis of a serious illness. Providers offer cover for a large range of conditions from cancer, stroke and heart attack through to multiple sclerosis and third-degree burns.

Won’t the Government look after me?

State benefits are designed to help in the event of someone not being able to work because of illness or accident but provide an income level that is usually much lower than is required to maintain your lifestyle.

For example, the current Statutory Sick Pay (SSP) rate, which may be payable to employees, is £96.35 per week (compared with £587.90 average weekly household spend). If you’re self-employed, you don’t qualify for SSP at all. 

Where can you get information and advice?

Your first step should be to speak to a specialist protection advisor. You don’t have to speak to us, but it would be our pleasure to have a chat with you about your options. There’s even a convenient booking button just below for a free, no obligation consultation.

The range of protection policies and providers on the market today can appear bewildering. At Warners Financial Services we take pride in taking time to fully understand our client’s needs and providing tailor-made solutions for them. Request a protection review today to see how much your family could benefit.

About the author

Simon is the newest addition to our team, having joined Warners in November 2021 as Business Manager and Protection Adviser. Simon has worked in financial services for 33 years, much of which has been at a global bank, but more recently working for a regional building society.

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