Choosing The Right Insurance To Protect Your Family

Posted 01.12.2020

If the last few years have taught us anything, it’s that life can throw a whole series of curveballs at us.

It’s likely that if you haven’t had the illness personally, you know someone who has dealt with COVID-19. This means you know the impact the virus can have, even long after the initial symptoms have lessened. Many people have reported what is now known as ‘long-tail covid‘. With long-tail covid, people have been left with lingering symptoms like shortness of breath, lethargy and brain fog for months after their initial illness.

Even the fittest people have been surprised just how long it has taken to get back to 100% health, both mentally and physically. Some people have needed long bouts of time off work while they fully recover, or needed to return on reduced hours. In both cases, it tends to also mean living on a reduced income.

Then, there are the millions of us across the UK who have been furloughed at some point during the last 18 months. It’s estimated this number reached up to 4.9 million people in January 2021. This has led to people living on a reduced wage but without reduced bills. This is on top of the emotional stress of being uncertain if they even have a job to return to.

Times like this remind us how important it is to prepare for the unexpected. Personal protection can help preserve your wealth and protect your family. With the right insurance policy, you can remove the financial stresses of covering bills and necessities whatever happens.

Below are just some of the types of insurance and protection policies available to help your family maintain financial stability throughout the most difficult of times.

Income Protection

An income protection policy has been designed to help you cover monthly bills such as your mortgage if you’re unable to work for extended periods of time. Your insurance provider will pay out a tax-free monthly income in the event of an accident or long-term serious illness that leaves you unable to work.

While there is financial support available through government programmes, these often don’t offer enough to cover your monthly bills. Paul Johnson, Client Banking and Mortgage Manager at St James’s Place notes “if you’re off work ill, for example, you may be able to claim state benefits but these aren’t necessarily going to cover your mortgage payments.”

To aid in your recovery, you may also find yourself with unexpected medical costs on top of your monthly bills. Without the right income protection insurance, this can begin to use up your savings and put you in financial difficulty.

How much cover your income protection pays out depends entirely on your policy. Income protection policies often kick in after a set period of time, often six to twelve months. Your income protection policy can continue to pay out for several years until you return to work, or even until retirement depending on the nature of your illness.

Critical illness cover

Critical illness insurance is there to help support the financial burden of being unable to work due to critical illnesses such as a heart attack, stroke or cancer. Unfortunately, many critical illnesses can come on suddenly and often without warning. Without the right critical illness policy, you and your family can find yourself in a difficult financial situation.

Critical illness cover pays out in a lump sum which can be used how you see fit. Some people choose to use their lump sum to pay for private medical care or to make necessary accessibility adaptations to their homes, such as a stairlift or ramp.

While we can’t take away the emotional difficulty of a sudden illness in the family, the right critical illness cover can help take one worry off your mind.

Life Insurance Policies

Life insurance is one of the most well-known forms of personal protection. Unlike insurance protection and critical illness cover, life insurance is not paid out until the policyholder’s death. Life insurance generally pays out as a lump sum upon death and it can be used to pay off a mortgage, clear debts or cover funeral costs.

This helps to minimise the financial impact of the policyholder’s death, especially if they are the breadwinner of the family. Unfortunately, without the right life insurance families can be forced to sell their property to cover debts or go into debt themselves.

There are a variety of life insurance policies so you can find one that works for your lifestyle and financial responsibilities. Working with a financial advisor will help you understand the life insurance policy that is right for you.

Are there other types of insurance?

As well as life insurance, critical illness cover and income protection insurance there are other types of financial support available. This can include rent insurance for landlords which helps cover rent payments if a tenant is struggling to cover the cost.

Whatever type of insurance you choose, it’s important to review your policies regularly to ensure that your needs are being met. Paul Johnson explains “if you have life cover on the decreasing term, for example, beware that this may not be sufficient to cover your mortgage if you move or remortgage.”

Your advisor at Rhodes Wealth Management can help you build a protection plan that is individually tailored to meet your needs and adapt it to your changing circumstances with regular reviews. The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances. With professional advice and assistance though, you can make sure you’re always up to date and making informed financial decisions.

You can get in touch with one of our financial advisors based in Derbyshire today for personalised advice on personal protection and how you can maintain your lifestyle, even when difficult times hit. All of our advice is personalised to our clients and our circumstances so you can be confident that you’ll be making a choice that benefits your whole family. 

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