You insure your car but not yourself?

Most of us look to protect our assets such as our home, cars, and now even our technology and mobile phones.

You insure your car but not yourself?

According to the Association of British Insurers of the 26.4 million households in the UK

• 76% of households have home contents insurance
• 64% have home buildings insurance
• 74% have motor cover
• 13% have mortgage protection insurance
• 6% have medical cover

Statistics show us that only a fraction of households look to protect our income or perhaps our largest asset – which is ourselves. As income earners, now and in the future, it is important to obtain the right protection to ensure your and family’s standard of living and lifestyle are maintained if something unexpected is round the corner.

If something does happen then all you have been working for – such as to pay off your mortgage, save for retirement, and save for your family’s financial future could be destroyed in an instant. It can end all the plans you have put in place to achieve your goals and may lead to some tough decisions about taking your pension early, selling the family home, and cashing in all of your savings and investments.

As advisers, we can use cash flow planning to help visually understand the impact of death, serious illness, or loss of income, by looking at how it could alter your lifestyle and how much you would need to maintain your family’s standard of living.

Highlighting the areas of risk which may prevent you achieving your goals and what lump sum or level of income would be required to solve those potential issues could save you from forced actions such as selling the family home.

Once the bigger questions of what level of shortfall, and therefore cover, is needed to ensure your financial plans are not obliterated, the appropriate products or action need to be researched and implemented.

There are numerous products with many options and features to choose from which need to assessed carefully to ensure that they do as they intend and pay the benefits when most needed and do not leave you high and dry.

Due consideration therefore needs to be given to any policy definitions and conditions along with the company’s claim statistics and price of course.

Application forms need to be completed correctly and honestly as any mistakes could leave the insurance invalid. Using the appropriate Trust forms will also ensure that any claims will result in the benefits being paid as quickly as possible to the correct people as tax efficiently as possible.

If you feel you need specialist advice to assess the risks in achieving your goals, help implement the appropriate solutions in the correct and most cost-effective manner, then source an appropriately qualified adviser who will look at the bigger picture and assess your need to protect you and your financial plans.

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About Author

Ian Gourley

Ian Gourley is an Independent Chartered Financial Planner at 2plan wealth management Ltd working with trustees, business owners, families and individuals providing financial planning and advice to manage and preserve clients' wealth.