Why Protection Matters to your Financial Plan
Please note that this content is for inspiration and information purposes only. It should not be taken as financial advice. Tax laws and pension rules are subject to change, and this content is accurate at the time of writing. To receive regulated, tailored financial advice regarding your own affairs and goals, please consult a financial advisor here in Meriden or in your area.
If you were to suddenly have a serious accident and no longer work, for instance, how would your family’s finances cope? Would you have the necessary safety net to keep meeting your monthly outgoings and preserve your wealth?
Here at BRI, we help many people in Meriden, Coventry and wider Midlands recognise the importance of protection and insurance within their financial plan. In this short guide, we’ll be offering a few ideas to discuss with your financial advisor about how to safeguard your family’s assets, lifestyle and future. If you’d like to discuss this important area of financial planning with us here at BRI, then please do not hesitate to get in contact:
Telephone: 01676 523550
Different insurance for different scenarios
It’s important to recognise that many different scenarios could derail your family’s wealth and finances. These include premature death, serious illness or injury, a large and unexpected inheritance tax bill, a dramatic and sudden lowering (or loss) of income and so on. A good financial advisor will not only help you craft a financial plan which grows your wealth, but helps secure it against these types of contingencies.
It’s tempting to dismiss these scenarios and think: “This will never happen to me.” However, almost everyone who experiences these tragedies also thought that way beforehand. Consider the story of Steve Steer, a 36-year-old mountain biker who had recently started a young family with his wife. One day he fell off his bike in Surrey and broke his arm. The next day he had a stroke which paralysed him, leaving him barely able to talk. He could no longer work, and his new business had to be shut down. Fortunately, in this case Steve had taken out income protection which was able to support his family going forwards. However, the story could easily have gone another way.
Different insurance plans exist to address various tragic scenarios which could threaten your financial plan. Here at BRI, we offer support and advice in a range of areas including:
- Life insurance, which pays out a lump sum if the policyholder dies. There are different types of policies, however, so it’s important to find the right one for your needs in consultation with your financial adviser. Broadly speaking, “term life” insurance will cover you for a fixed time frame whilst “life assurance” will cover you indefinitely.
- Critical illness cover provides a lump sum if you are diagnosed with a specific illness covered under the policy (e.g. stroke or heart attack).
- Income protection provides a percentage of your previous income if you are deemed no longer able to work due to injury or illness. The ongoing payments range in value according to each policy, but as a benchmark many will pay out two thirds of your income after tax.
Do I need financial protection?
Some financial advisors can be a bit alarmist when talking about financial protection, sometimes giving the impression that you need all of the above policies right away! However, it’s important to consider your own financial goals, situation and strategy before rushing to purchase financial protection. A financial advisor will also be able to help you determine which areas of protection are most relevant for your needs and where to find the best deals.
For instance, if you are a homeowner, then it is a good idea to at least consider critical illness cover and/or income protection. After all, if you suddenly become ill or injured and could no longer work, you would still have a mortgage to pay off. Having access to a lump sum and/or regular income protection payments could help you weather the financial aspects of such a “life storm”.
If you live with a spouse, partner or dependents (e.g. children), moreover, then you might want to think about life insurance too. If you suddenly died, then these loved ones would need to continue meeting important living costs such as food, schooling and heating. In the absence of your income within such a scenario, a large lump sum from a life insurance policy could ease their monthly outgoings by perhaps settling the mortgage, and providing a vital “buffer” to meet ongoing living costs for the next few years as they find their feet.
Financial protection is never a pleasant topic to think about, but it’s in our family’s best interests that we ensure proper measures are in place should the worst happen to us.
Please do not hesitate to contact us to arrange a meeting to discuss this further with one of our Advisors.
Telephone: 01676 523550