Five reasons you need to protect yourself today

24 May 2019

Five reasons you need to protect yourself today

Nobody wants to think about the worst happening. But, whether you’re single with a job or working to support your family, the impact of death or illness could be severe.

Figures from the Associate of British Insurers show that only around one in four households has any whole of life, term assurance or income protection cover in place. This means there are millions of families who could potentially fall into financial difficulty if one of them died. And, it means there are many people who would struggle to make ends meet if they couldn’t work for an extended period.

Luckily, there’s plenty that you can do to ensure you, your family and your assets are protected. Here are five reasons you should think about protecting yourself today.

1. You want your family to stay in your home

Your mortgage is likely to be your biggest financial commitment. So, if you died, would your family be able to continue to meet your monthly repayments? Could they pay off your mortgage? And would they be able to continue living in your family home?

If you want to give your partner and/or family the peace of mind that they will be able to continue living in your home when you’re gone, life cover can help to do this.

A decreasing term assurance policy will reduce in line with your repayment mortgage and is designed to repay whatever you owe.

A level term assurance pays out a fixed amount on death. It’s generally more suitable for an interest-only mortgage, or if you want to ensure you leave a lump sum in addition to repaying your mortgage.

Whatever type of cover you choose your family will have the security of knowing that your mortgage can be repaid when you pass away.

2. You’d want to pay your bills if you become unemployed

If you become unemployed, could you continue to pay your mortgage or rent and your utility bills?

Jobseeker’s Allowance will currently pay you up to £73.10 per week (assuming you’re aged 25 or over) for up to six months. Considering that the average monthly rent in the UK is £940, living on Jobseeker’s Allowance alone would be difficult for many people.

Unemployment cover can pay you a monthly amount for a fixed period if you lose your job. So, while you’re looking for a new job, your protection is helping you to meet your regular monthly commitments.

3. You want your beneficiaries to inherit your entire estate without losing a chunk to tax

If your estate is valued at more than £325,000 then you may have to pay some Inheritance Tax (IHT) when you die.

The most recent figures from the Office for Budget Responsibility show that 24,500 estates were liable for IHT in 2015/16. Inheritance Tax is currently charged at 40%, so on a large estate, there could be a significant amount of tax to pay.

While you can transfer your Nil Rate Band between spouses and claim an additional tax-free allowance if you leave a property to your children, many estates still end up being valued above the tax threshold.

If you want to ensure that your beneficiaries receive the entire value of your estate when you die, life insurance can help. Whole of life cover will pay out a lump sum on your death, and if you place this policy in trust, the proceeds will likely not form part of your estate.

4. You want to concentrate on recovering if you’re seriously ill

Cancer Research UK say that one in two people in the UK born after 1960 will be diagnosed with some form of cancer during their lifetime. The BHF say that there are more than 100,000 hospital admissions each year in the UK due to heart attacks. And, according to the Stroke Association, there are more than 100,000 strokes in the UK every year.

If you suffer a serious illness, the last thing you want to be worrying about is your finances. Concentrating on your recovery should be your priority, and that’s where Critical Illness Cover can come into its own.

If you’re diagnosed with one of a specified list of conditions, Critical Illness Cover will pay a lump sum. It’s designed to help you to get through this difficult period and, as it is paid on diagnosis, you’ll still benefit from a payout even if you make a full recovery.

5. You want your partner and family to enjoy the same standard of living if you’re not around

If you’re no longer around, your family and children will still have financial commitments. Maybe you want your kids to go to university? Do you want to leave a lump sum so your partner doesn’t have to go straight back to work? Or perhaps you simply want to leave your family with a financial legacy to make things easier for them when you’re gone?

Whatever the reason, life assurance can help. There are lots of different types of cover available, and one of our advisers will find out what’s important to you and recommend the right protection for your needs. Email or call (01727) 848412 to find out more.

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