Is it time to get your family protected

Posted: Saturday July 11 2020

By: Lisa Vaughan

The coronavirus pandemic comes with wide-ranging and often unprecedented consequences for individuals and their families and has reminded us of the importance of being prepared. Is it time to get your family protected?

Is it time to get your family protected

There is no time like the present to consider how secure your family’s position would be, should the unthinkable happen.

What is family protection?

Go back in time, and you’ll find life insurance was the mainstay of a financial plan – the first thing you did. But the latest figures from the Association of British Insurers suggest that many households no longer see it as a must-have.

They found that only six million households have some form of life or income insurance in place, compared to 19 million that have home contents cover. In other words, two-thirds more households seem to value their TVs, smartphones and vinyl collections over themselves. Which would your family miss most?

Most families would have to reduce their living costs in order to survive financially in the event of a breadwinner falling ill or dying prematurely. Family protection is all about having a financial safety net in place so that the family can remain financially secure should the unthinkable happen.  It can be set up to pay a lump sum or a regular income on death or diagnosis of an illness of a family member.

Family protection can cover life insurance, critical illness cover and income protection.

Who should consider taking out protection?

Most people should consider protection, even those who don’t have a family or a mortgage, as most people rely on their salary to pay bills, school fees and holidays.  The exception might be those people with substantial savings they can fall back on.  Taking out protection will give peace of mind, knowing that if the worst does happen they will still be able to pay the bills.

What are the alternatives to family protection?

Dipping into savings or relying on state benefits might seem like obvious alternatives to taking out protection, but recovering from an illness can take a long time.  Sick pay from an employer could help but might only last a few weeks and not all employers provide sick pay arrangements beyond the minimum required by law. Statutory sick pay or benefits from the state is not likely to be enough for a family to live on and maintain the lifestyle that they’re used to.

There is also a misconception that employers will continue to provide an income in the event of falling sick. In reality, employees are rarely covered for more than six months before they are moved onto statutory sick pay.

Protection doesn’t have to be pricey

For some it is the cost, or perceived cost, of insurance that puts them off. But for those who have it, the cost of a simple term insurance policy may only be a couple of pounds a day – less than the price of a skinny latte from your local coffee shop.

So, while breaking your smartphone is undeniably inconvenient, leaving your partner to struggle with the cost of raising the family, mortgage payments and loans for the price of your daily caffeine fix could prove a much bigger problem.

Lisa Vaughan FPFS

Chartered Financial Planner

www.lisavaughanfp.co.uk

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Lisa Vaughan Financial Planning Ltd is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website
www.sjp.co.uk/products