Throughout our working lives, most of us strive to earn a good income to provide for our families and enjoy our time. Whether we want our ‘forever home’, the ability to privately educate our children, or even be able to enjoy exciting annual holidays, earning a good income helps us to enjoy our time and lead comfortable lives. But what would happen if that income suddenly stopped? Would you be able to pay the mortgage? Could you afford school fees? Would you even be able to put food on the table?
The best way to protect your money and your family is through suitible insurance and safeguarding strategies.
Whilst none of us can accurately predict the future, that doesn’t mean that we shouldn’t consider life’s unexpected moments and protect ourselves from the unknown.
Imagine you contracted a serious illness or had an accident and couldn’t work. How would you and your family cope? You might have savings set aside for such eventualities, but would they be sufficient? And what if you needed specialist care? Would you want to compromise the security of your family’s wealth so that you could get better?
A quick question: Do you insure your car? I would hope that if you drive you do! I bet you insure your home, pets, holidays, and even your mobile telephones. We insure these things to protect them from the worst. Insurance means that if our kitchen caught fire, we’d have money to repair it; if our faithful four-legged friend broke their tail, we could afford to pay the vet to restore them to full health; if our holiday was cancelled, we wouldn’t be out of pocket.
So why is it that so many of us neglect to insure the most important aspects of our lives? We protect material objects and possessions but forget about our health and our ability to generate an income.
If you take a moment to consider how much you are worth over your lifetime, you are most likely to be the most expensive asset that you own. For example, if you started earning £30,000 at age 20 and this rose with inflation each year (approx. 2.5%), by the time you retire, say at 65, you would have earned £2.5m! If you owned something worth £2.5m would you get it insured? You are darn right you would!
Income Protection is considered to be the most important piece of financial planning by the FCA, as it underpins all of the rest of your strategy. It ensures that if you are unable to work, as a result of illness or accident, you receive an income until either you return to work, or you retire. Unlike policies sold by the banks, like PPI, it is underwritten at the point of application, not the point of claim, which means it is much more likely to pay out when you need it.