“Plan for the worst and hope for the best”
On the whole this is a subject that most people do not like to discuss because it means thinking about some of the most painful and difficult times any of us will ever face, the loss of a loved one. And the idea of paying for something we desperately hope we will never need sometimes feels at odds with our natural instinct to provide for and protect those closest to us. Thinking about these things and planning to protect the future security of your family and loved ones in the event of a serious or critical illness, accident or death is the foundation of good financial planning.
Not everyone needs protection cover but if your children, partner, or other relatives depend on your income to cover living expenses such as a mortgage, child care or any other expenses then it is more than likely that you would need advice to ensure that you and your family’s future is secured.
Illness or injury can seriously erode your savings or may even limit the future ability to earn the same level as before.
If a serious or critical illness were to strike, your ability to continue earning money for your family at the same level as before is likely to be seriously impeded. This in turn may cause financial difficulties for your family that could have been prevented with some planning to mitigate this risk.
Cost effective solutions
There are lots of different types of policy available and it can be confusing to find your way through the maze of information that is available online about this subject.
To summarise however there are four main areas of protection available to protect your family and loved ones from death or accident.
- Life cover – paying a lump sum on death that will help repay outstanding mortgages and loans and provide a financial safety net for your loved ones. There is also a variant of this called Family Income Benefit that will provide a regular income to your family if the worst was ever to happen.
- Critical Illness Cover – taking away financial worries when you face the most serious of illnesses, giving you and your family the freedom from financial worries whilst you focus on your health
- Income protection – if illness or accident leaves you unable to work due to prolonged illness or following a serious accident, income protection provides you with extended ‘sick-pay’ beyond the benefit you may receive from your employer.
- Accident, Sickness and Unemployment Cover – typically covering the impact of the unexpected over a period of 2 years.
In general the cost of the monthly premium for a protection policy will depend on the following:
- The type of cover required
- The amount of cover required
- The age of the applicants
- Whether the applicant is a smoker
- The applicant’s occupation
Our PFM Financial Consultants will spend time with you to look closely at the most effective way to offer your family protection and the security of their financial futures against all the risks that we have looked at. They can also look at all the various options available to you from across all companies in the UK to make sure the cover available is in line with your budget.