According to the latest figures from 2018 – the UK is under-insured.
Each year the Association of British Insurers (ABI) publishes a summary of the UK insurance industry, which shows that it paid out more than £5.3 billion in protection claims in 2018 – a £200 million increase year on year, with over 35,000 families / beneficiaries supported following an unexpected bereavement.
Whether it's Life Insurance, Critical Illness Insurance, Mortgage Protection or even Income Protection, it’s important to protect your family’s financial future. But many do not.
In the words of Benjamin Franklin ‘In this world nothing can be said to be certain, except death and taxes’. But do we really want to think about this? The hope is that we all live to a ripe old age. But what if you don’t, then what?
Well, if you don’t have insurance now you may need to re-consider. One of the big questions to answer is – what would happen if your income was removed from the household? If the answer is that this will likely cause financial stress on your family or yourself, it’s time to do something about it.
Also, things change all the time, so even if you are fine now, it’s important to take stock of your finances when there are any significant life events coming up, such as:
- Getting married
- Buying or upgrading a new home
- Taking out a mortgage
- Birth of a child
- Change in your personal health
And, even if you don’t have people that rely on you, you should consider protecting yourself and your income.
You won’t be alone if you decide to park this requirement for now. Last year, there were 11.1 million households in the UK with mortgages, but only 8.1 million households with protection in place. But, have you considered how many months it would take before you are unable to meet your mortgage payments and possibly end up losing your home altogether?
It’s a good idea to understand you and your family’s financial exposure to income shocks caused by being left unable to work – you will then be best placed to understand what type of cover you may require.
Every household’s expenditure is slightly different. In August 2019 the average mortgage debt was £132,633. Once you start to include the household bills and food bill you start to build a picture of what it will take to run a household.
But, it’s not always about the costs of running a household. If you have children there are extra costs you need to consider. According to the Child Poverty Action Group 2018 report, the additional full cost that a child adds to a household, over 18 years, is over £144,000 if there is a couple, or over £199,000 for a lone parent.
No wonder that, repossession is on the up, with a finder.com report highlighting that every 1 hour and 34 minutes a property was repossessed in the first three months of 2019.
There are a range of protection products out there, so if you are looking to cover yourself or your mortgage, here’s an explanation of the products that Foresters offers:
- Life Benefit - This covers the Planholder for premature death and terminal illness. There are options to take this out, to pay out either as a lump sum or in monthly instalments
- Critical Illness - Covering the Planholder for total permanent disability and a range of critical illnesses.
- Combined Life and Critical Illness Benefit - Covers the Planholder for premature death or permanent illness, Total Permanent Disability and a range of Critical Illnesses.
- Mortgage Protection - For many of us, a mortgage is the biggest financial commitment we’ll ever make. Our Mortgage Protection Plan can be used to repay a mortgage in the event of premature death and may include Critical Illness (to cover Total Permanent Disability and Critical Illness).
- Income Protection - A product that is designed to help fill income gaps when a person is unable to work due to illness or injury. Monthly pay-outs are made for as long as the claim is valid. You need to decide the amount of benefit, how soon the benefit should start and how long the cover should last.
And if you have decided to proceed, make sure you consider future costs. Our article 'Calculating the Cost of Life Insurance' may help you consider the things you need to think about. Protection Plans are not always as expensive as you think. But be aware that it’s not always best to go with the cheapest policy.
Always read the terms and conditions of any protection policy you take out. So if it’s Critical Illness, be aware of what illnesses are covered. Cancer continues to be the highest cause of critical illness. If you purchase Income Protection be clear when the cover kicks in.
Whatever you decide upon, things change and most advisers recommend that you review your life insurance policy at least once every 12 months or if you have any significant life events – you can then be sure that you have the most suitable option available to you.
How can Foresters Financial help?
Our Financial Advisers will be able to visit you in the comfort of your own home at your convenience. They will be able to help you determine the level of cover you require to suit your needs and will be on hand as your financial circumstances in life change.