In an ideal world, we would all buy insurance against the financial cost of horrible things happening in our lives – death, serious illness or long-term ill health.
Unfortunately, this isn’t the case. Maybe we have better things to do with our hard-earned money.
Or, perhaps we have a subconscious suspicion that maybe the insurance won’t actually pay up in our hour of need.
Every year, the most common form of protection insurance taken out is life insurance, which will pay out on death.
Next is critical illness insurance which pays out a tax-free lump sum on diagnosis of certain illnesses such as cancer, stroke or heart attack.
The least common of the three is income protection, bought to provide a monthly (tax-free) benefit in the event of long-term illness.
These numbers defy logic. They should be the other way round.
You have more chance of being off work for six months with long-term illness than you have of either dying or suffering a serious illness.
Many of us take for granted that we must insure our homes, our cars, our pets but yet overlook our biggest asset… us!
Over a working life of 40 years at the UK’s average wage of £26,500 per year, you can expect to earn in excess of £1,750,000 (assuming 2.5 per cent per year wage inflation).
Despite this, many of us will never consider the financial loss that long term illness, or disability, will bring.
A solid financial plan may have elements of life insurance, critical illness cover and income protection, amongst other things, and should always be kept within a budget.
Speak to your Independent Financial Adviser to ensure that the plans you put in place are the most suitable for you, your budget and, most importantly, will pay out when you need them to!
If you have any questions, or if there are any topics that you would like me to cover in future columns, please do not hesitate to get in touch.
