We’re all used to paying for car insurance and home insurance, but what about protecting the most important thing in our lives – our family?
Here we take a look at some of the most key aspects to consider when looking at life, critical illness and income protection cover.
Do consider insurance alongside a life event
There are a number of events in life that should trigger you to review your protection needs. These include:
Buying a house – It can be sensible to link a life insurance policy to the length of time and level of mortgage you have. As and when you move, these figures are likely to change, so should be reviewed accordingly.
Having a family or getting married – When you have dependents in your life, your priorities are likely to change and you will need to consider providing for others in the event that you could no longer work or worse. It isn’t nice to think about, but many people feel safer in the knowledge that existing family members would have financial help to cover the mortgage / bills / food / childcare costs if their income was no longer there.
It’s not just loss of income that needs to be considered, what would happen if one parent was the main care giver and became seriously ill, or worse? How would this impact the ability of the other parent to continue to work and provide childcare?
Changing jobs – employee benefits vary from employer to employer, so it is always worth comparing benefits when considering moving jobs.
Don’t assume your existing cover is suitable
Just because you have gone through the process of putting cover in place before, it doesn’t mean it will still be suitable for your needs. If you do not review your protection cover on a regular basis, you could end up paying too much for a policy.
On the other hand, the cover you have may not be sufficient to cover your current mortgage or provide enough to support your family if needed. You should review the cover you have in place at least every three years or following a significant life event.
Another reason to review your existing cover is that there might be a better contract available from another provider. Policies are developing all the time and some companies have improved their offerings to cover dementia, frailty cover and funeral costs, which may not have been included on older contracts. Other providers link insurance fees to keeping fit and active, providing benefits and discounts to those that engage with looking after their health.
Conversely, existing cover should not be cancelled without careful review. Some older style contracts can offer more comprehensive cover for certain conditions that may now be excluded due to medical advancements.
Don’t rely on employee benefits
If you are employed, it is a good idea to check if you have any existing employee benefits in relation to health, life or critical illness cover. Some companies have ‘death in service’ in place for employees – if this is applicable, find out how much this would be and importantly, check if you have an up to date death benefit instruction in place. Your employer probably offers sick pay – but this may be on limited terms and could only apply to short term illness, and therefore wouldn’t support you in the event of a serious or life-threatening illness. It’s also important to remember that any benefits hinge on remaining employed at the same company.
If you are self-employed or run your own business as a Director, you are unlikely to have any cover in place whatsoever if you were not able to work due to illness or other incapacity. Income protection can provide this – and as the cover can be tailored to your needs, there are many options available.
Another point of consideration as a business owner is how your business would continue in the event of your serious illness or death. There are a number of specialist options available for business protection that may be suitable for Directors, Partners or other key people.
Do act sooner rather than later
The cost of life cover, income protection, and particularly critical illness cover all increase with age. So the sooner you are able to get cover in place, the cheaper it is likely to be.
Don’t wait for a health scare!
People are often prompted to consider or review their life and critical illness insurance after they have a health scare. Suddenly, the prospect of not being there for your family comes closer to home, and you may consider the ways in which a payout from an insurance policy would help.
Although looking to put better protection in place is a positive step, waiting until you’ve already had a health concern is unlikely to be the best time. Any insurance provider will conduct a full health review, at which point you would need to declare any recent health investigations you may have had undertaken. This could increase the price of cover or lead to the provider stipulating an exclusion on the cover they offer.
To discuss your current protection arrangements, please contact us. We can review the current protection market and provide you with independent protection advice, tailored to your needs.