The cost-of-living squeeze has led many of us to look at ways we can reduce our spending – whether it’s buying fewer non-essential items, reducing the amount we spend on socialising and hobbies, or using less fuel in our homes.
It’s also tempting to think you can do without your life insurance policy and make a saving on those annual or monthly premiums. But as other costs increase, particularly monthly mortgage repayments, it’s even more important to make sure you are protected should something happen to you.
Read on to find out more about three insurance options you may want to consider: income protection; critical illness; and life insurance.
Income protection provides a tax-free monthly income, to cover you should any illness or injury prevent you from working. Common claims are for work related stress, depression, anxiety, back and sport injuries.
You can choose cover that pays a monthly income for the full term of the policy (usually all the way up to retirement age if you were permanently incapacitated) or a limited period per claim of either 60 months, 24 months or 12 months, which are lower cost options.
Unlike workplace benefits, Income Protection can cover you for bonus and commission income and other benefits that are normally paid much sooner.
- 2. Critical Illness Cover
Critical illness cover pays a single, tax-free lump sum payment, on diagnosis of a serious or critical illness like cancer, stroke, heart attack or permanent disability.
Cover is set for an agreed period from the outset, typically matching the term of your mortgage or up to your intended age of retirement. Policies also include free cover for children from birth, up to the age of 21.
This type of cover is designed to provide financial breathing space while you recover from an illness, allowing focus to be on recovery rather than how you are going to pay your mortgage, utility bills and general living costs.
Life insurance pays a single cash sum to your family or dependents if you pass away prematurely during your period of cover.
In the years that families and individuals are most vulnerable from a financial perspective, such as during economic downturns, this is often the form of cover that is least likely to be prioritised. However, if you have a mortgage, dependent children or will likely pass an inheritance tax bill onto your loved ones, it is worth considering how you and your family are protected against the unforeseen.
Today’s life insurance policies often do more than their primary job too. Insurers now regularly offer a whole range of other benefits and savings, from free physiotherapy and counselling to discounts on treatment and reward schemes.
It’s worth bearing in mind that the cost of all personal insurances increases as you age, but once a policy begins, the premium is locked in for the lifetime of that policy meaning inflation effectively brings the cost of your insurance down over time. For example, a new £250,000 life cover policy up to age 70 for a 40-year-old would be £22, but for a 50-year-old would be £38. The cost of cover is always cheaper today, compared to tomorrow.
In the first instance we recommend you consider your income protection, particularly within the current economic climate. Then, if you have contingencies such as savings, rental income, or long-term sick pay benefits in place, it could also be beneficial to look at critical illness and life insurance cover for more serious events.
If you are interested in finding out more and would like to discuss your personal insurance options, contact our specialist insurance team who would be happy to help. They will provide you with an unbiased recommendation based on your financial and family circumstances.