Would you (or your family) cope financially if faced with an untimely death, serious health issues, a major injury, or other massive shocks to the existing lifestyle?
We go off and insure our cars, homes, mobiles, and pets but do we think enough about protecting a key asset(s) – a wage earner – and what would happen if this income stream dried up, or was reduced markedly?
Of course, many of us may feel, ‘it’ll never happen to us’, or that ‘the state, (or employer) will step in’, but the latter options may offer limited support, and often only for a short period. As for the former – the protection industry is awash with sobering research on the numbers that have faced serious illness, injury, or an early death (see some facts in the panel below).
Yet, even at the basic level of protection needs, half of the people in the UK with a mortgage have no life cover in place! This means that they are leaving themselves and their families financially exposed should the worst happen. The same research also shows that more than two-fifths of mortgage holders couldn’t live on the, possibly, resulting ‘single wage’, and would have to then turn to dipping into their savings to survive – savings that many feel would only last for a few months. (Source: Scottish Widows, June 2016)
So, it makes sense to ensure that life cover is in place to help pay off the mortgage should the unthinkable happen (plus a bit more to help cover immediate living costs). There are numerous options to consider, but the most basic is Term Assurance, where you choose the amount you want to be insured for and the period for which you require cover. If you die within the term, the policy pays out.
Should you not die in this period, then the policy won’t pay out and the premiums you’ve paid are not returned to you.
There are two main types to consider – level and decreasing-term insurance. As the names suggest, with level-term the amount of cover remains the same, but with a decreasing-term policy, the level of cover decreases over the policy period – possibly to cover a debt that reduces over time, such as a repayment mortgage. Premiums are usually noticeably cheaper for the latter, albeit you may decide that maintaining the constant lump sum level of the former may be a better option for you.
Even if you don’t have a mortgage, you’ll probably still have major financial responsibilities (rent payments?), so it would also be wise to consider having life and other protection cover in place.
Make sure you take advice
Whilst there are more complex protection products to consider which meet other needs – such as facing a serious illness, or being unable to work for a long period due to illness or injury – it makes sense to take advice for life cover too. For example, once you start the process, you need to consider a number of options, like ‘single or joint cover?’, or ‘inflation linked?’. So it makes sense to get in touch and then we can thoroughly discuss your needs.
It makes you think…
Leaving loved ones behind to pick up the pieces.
– On average, around 120 adults, aged 18-55, die every day.
(Source: Office for National Statistics, 2014 UK figures, December 2015)
Will the income stream be hit, whilst the wage earner recovers?
– In the 1960s more than 7 out of 10 heart attacks in the UK were fatal. Today at least 7 out of 10 people survive.
(Source: British Heart Foundation, December 2016)
– Every two minutes someone in the UK is diagnosed with cancer.
(Source: Cancer Research UK, 2014 research)
– One in 10 will face a period of sickness absence off work of more than six months. (Source: Demos survey, April 2013)
As with all insurance policies, terms, conditions and exclusions will apply.