Personal Financial Protection
Securing Your Financial Future
Have you considered how your loved ones would manage financially if you were no longer around or unable to work? Many people avoid thinking about this difficult topic.
Why Consider Financial Protection?
While death and illness are uncomfortable subjects, they’re realities we all face. Life is unpredictable, and even the most careful financial planners can have their strategies disrupted by unexpected events.
Ask yourself: Could your family maintain mortgage payments and their current lifestyle if you passed away? If illness prevented you from working, how long could you cover expenses without depleting your savings?
Financial protection products provide peace of mind by ensuring your family’s financial stability during challenging times. They also safeguard your progress toward long-term financial goals.
Finding the Right Protection Solutions
The ideal protection package depends on your specific situation, including whether you own or rent your home and have financial dependents such as a partner or children. While a financial adviser can provide personalized recommendations, here are the main options to consider:
1. Life Insurance
Life insurance provides a lump sum payment upon your death. The most common types include:
- Decreasing term insurance: Coverage that reduces over time, typically aligned with a repayment mortgage’s decreasing balance
- Level term insurance: Coverage that maintains the same payout amount throughout the policy
Life insurance can be either:
- Whole of life: Continues until death, guaranteeing an eventual payout
- Term: Covers a specific period, paying out only if you die during that time
Anyone with a mortgage or financial dependents should consider life insurance. Beyond covering mortgage payments, the payout can provide additional financial security for your family.
2. Family Income Benefit
Unlike standard life insurance, family income benefit provides regular payments (rather than a lump sum) from your death until the policy ends. For example, a 20-year policy with a death occurring 15 years in would pay benefits for the remaining 5 years.
This protection is particularly suitable for families wanting to provide their surviving partner with ongoing income for expenses like school fees and household bills.
3. Critical Illness Cover
Critical illness cover delivers a lump sum if you’re diagnosed with a condition covered by your policy. This payment could help clear mortgage debt, handle other financial obligations, or modify your living arrangements to accommodate your changed circumstances.
These policies vary significantly between providers in terms of conditions covered, severity requirements, and premium structures (either “guaranteed” fixed premiums or “reviewable” premiums that may increase).
If your savings wouldn’t adequately support you during serious illness, critical illness cover merits consideration.
4. Income Protection
Income protection provides regular payments if you can’t work due to accident or illness, including mental health conditions. You can customize:
- When payments begin (longer waiting periods typically lower premiums)
- Coverage duration (short-term coverage of 1-2 years or long-term coverage until retirement or policy expiration)
This protection is especially valuable for self-employed individuals or those with employers offering minimal sick pay benefits.
Taking Action
Determining appropriate protection products and coverage amounts can be challenging. Professional financial advice helps ensure you make informed decisions that provide comprehensive protection for your family regardless of what life brings. For personalized advice suited to your circumstances, contact us today.