How prepared are you for a financial curveball?

As the last few years have shown us, unexpected events can happen any time. Four prime ministers in six years, a Covid pandemic, Brexit and a land war in Europe were all things none of us could possibly have predicted – and yet that’s exactly what the UK looks like in 2022.

When it comes to your household finances, it’s important to prepare for a financial shock. 

So, read on for three clever ways that you can give yourself more financial peace of mind.

Put the right life insurance in place

No one wants to think about death – and if you’re young you can feel invincible and believe that it’s not something you should worry about.

However, in 2021, there were 586,334 deaths registered in England and Wales. Of these, Office for National Statistics data shows that more than 11,000 were aged between 20 and 40.

With thousands of younger people dying every year, it’s important to think about how your loved ones would cope if you were no longer around.

For a small payment every month, life insurance pays out a tax-free lump sum if you die within the term of your policy. Cover is normally cheaper if you are younger, so it can really pay to think about putting protection in place early.

If you have a mortgage

If you have a joint mortgage and you die, the other person would be liable for the entire debt and the monthly repayments.

Would they be able to continue to make the repayments? If not, would they have to sell the property?

While you’re not obliged to take out life insurance when you get a mortgage, it is a good idea to put some protection in place. If you or your partner were to pass away, a lump sum would be available for you to repay the mortgage.

If you are the main earner in the household

If you are the main earner in your household – especially if you have children or other dependents – your loved ones might struggle to maintain their standard of living if something happened to you.

Could they afford to stay in the family home? Would they be able to pay their regular bills? Would your children be able to live the life you wanted for them?

Life insurance can provide vital cash to cover costs to support your children and dependents whilst growing up.

Cheap and easy to arrange

Despite the importance of having protection, a recent survey published by Cover revealed that fewer than 1 in 4 people currently have a life insurance policy in place.

Lisa Caplan from the firm that commissioned the research said: “The findings of our recent study make for difficult reading. We urgently need to take steps to boost financial resilience now.”

Life insurance is one simple and cost-effective way to provide financial stability. Get an online life insurance quote now to find out just how low your premiums might be.

Make sure you have an “emergency fund”

Unexpected bills can turn up at any time. Whether it’s a leaky roof, a malfunctioning boiler, a car breakdown, or a period out of work, these annoying financial events can happen without warning.

So, one way of creating financial stability is to ensure you have an “emergency fund” set aside to meet these unexpected costs.

An emergency, or “rainy day” fund, is a pot of cash that you put aside to assist you in a time of need and to cover a financial shock. Experts normally recommend that you hold between three- and six- months’ expenses in an easy access account – and only to use these funds for genuine emergencies.

Despite the importance of having an emergency fund, the Evening Standard reports that 29% of people aged between 35 and 44 have no cash buffer to protect them, while just 20% of people aged 18 and 24 have enough money set aside to fund their crucial bills for three months.

Having this fund available will make you feel less stressed and prevent you from turning to expensive debt in a time of need. 

Protect your health and your income

According to Association of British Insurers data published in the Evening Standard, every year 1 million workers in the UK unexpectedly find themselves unable to work because of injury or illness.

If you had to take an extended period off work, who would look after you? Could you continue to pay your regular bills? Would your employer continue to pay full pay for months on end, or could you end up on Statutory Sick Pay which, in 2022/23, is just £99.35 a week?

Worryingly, the survey reported in Cover reveals that just 7% of adults in the UK have either a Critical Illness or income protection policy.

Critical Illness cover

Critical Illness cover pays a tax-free lump sum if you are diagnosed with a critical illness specified under your policy terms and conditions. 

The three most common claims under Critical Illness protection are cancer, heart attack and stroke but plans typically cover a wide range of conditions such as multiple sclerosis, Parkinson’s disease, and the loss of a limb.

You can use this tax-free lump sum to replace income, pay off debts, or to adapt your home. It provides vital financial reassurance at a stressful time, so you don’t have to worry about money as you focus on your recovery.

Get a Critical Illness quote now.

Income protection

Income protection pays you a tax-free regular monthly income if you are unable to work due to long-term sickness or disability. You will normally receive payments until you return to work or retire.

Most income protection has an “£excess period” before the cover kicks in – this is often 4, 8, 13, or 26 weeks. This allows you to dovetail cover with your sick pay arrangements at work. 

For example, if your employer would pay you full pay for two months, you can arrange for your income protection to kick in after eight weeks.

Cost-effective and flexible

Protecting your income in the event or accident or ill health gives you the peace of mind that you’ll be able to pay your bills if an unexpected event happens. It will ensure you receive financial support when you need it most, enabling you to focus on your recovery.

We can help you to find the right cover at the right price

Creating financial security and stability can provide you with genuine peace of mind. We can help you to find the protection you need at the best possible price, ensuring you don’t have to pay more than you should for the cover you need.

Find out more about how we can help:

Customers love our 5-star rated service as well as our highly competitive rates. We work with dozens of the UK’s leading insurers – including Legal & General, Aviva, Royal London, Aegon, LV= and Zurich – to find the lowest cost cover.

Getting a quote is easy. Simply head to our website to get an online life insurance quote or an online Critical Illness cover quote in just a couple of minutes. Or get in touch with one of our experts.

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