According to research from Scottish Widows, more people have mobile phone insurance than Critical Illness Cover.
Replacing a phone can be time consuming and paying out for a new handset might be inconvenient, so having insurance makes sense. However, it is easier to get a new phone than it is to pay your bills if you suddenly fall ill or suffer an injury which means that you must take time off work.
The number of people with Life Insurance has fallen by 7% over 12 months, leaving just 27% of people with financial protection in place for their loved ones, in the event of their death.
Why do you need to protect your household finances?
21% of people know that their household would have trouble paying bills and surviving financially if they suddenly lost their income.
To add to this concern, 42% of UK households run on a sole income, without which, there would be no provision to keep it running.
While some people (43%) may be able to rely on their, or their partner’s savings to keep the family afloat, 35% only have enough to cover the household expenses for three months and more than half (54%) would need to turn to other sources of income after a year. Even more at risk, are the 30% who do not have any savings and are not currently putting anything aside.
What protections should you have?
There are three types of insurance that most adults should have; especially those with outstanding mortgages and responsibilities which will need to be paid even after death. They are:
- Life Insurance: Pays out a lump sum to your beneficiaries if you die within the terms of the policy.
- Critical Illness Cover: Pays a lump sum or income to you and your benficiaries if you are diagnosed with a serious illness covered by the policy.
- Income protection: Pays a portion of your usual income to you and your loved ones if you are unable to work for some time due to illness or injury.
If you already have protection in place
Your job is still not done, unfortunately.
There are several times in life when you will need to review the protections you and your partner have in place to keep the household running financially, in the event of a lost income, these include:
- When new children enter the family
- Career changes; where you switch to a career with less risk attached.
- Lifestyle changes (divorce, marriage, etc)
- Change of personal details
- Change of beneficiary
Reviewing your financial protections during these events will:
- Lower premiums: As there will be less financial responsibilities to cover in the event of a loss of income, you may be able to reduce your protections, and simultaneously, your monthly expenses.
- Offer reassurance: Should you need to make a claim on any of your policies, your information will need to be up to date. It is important that your details are also up to date, as any policies which are set up to protect you and your family could be at risk of not paying out, if it is found that your information is out of date.
How likely are you to lose an income?
Illness and injury are two major forms of bad luck, but it is not so uncommon for households to fall into financial issues due to suddenly losing a main income. It can happen for many reasons, including death, redundancy, illness and injury, and is more common than you might think.
Each year, approximately one million households find themselves struggling to make ends meet as a result of being unable to work for at least one month (Source: Department for Work and Pensions).
Feeling lost? Talk to a professional
Giving advice on all things mortgage related is our speciality, so for more information on the ways you can protect yourself against defaulting on your mortgage repayments, please get in touch with us on 0207 808 4120.