Many people assume they are financially protected if their income suddenly stops. However, when asked exactly what their insurance policies cover, many are unsure.
Would your mortgage still be paid? Could household bills continue? Would your family lifestyle be affected? These are difficult questions but important ones.
Protection insurance is designed to help provide financial security. The challenge is ensuring you have the right cover in place.
Understanding different protection policies
One of the biggest misconceptions is that all protection policies do the same thing.
In reality, different products are designed for different circumstances.
Income protection
Income protection is designed to provide an income if illness or injury prevents you from working.
Payments are usually based on a percentage of earnings and may continue for a defined period depending on the policy.
This type of cover focuses on health-related absence rather than redundancy.
Critical illness cover
Critical illness cover pays a lump sum if you are diagnosed with a specified illness covered under the policy terms.
Examples may include certain cancers, heart attacks or strokes.
Coverage varies between providers.
Life insurance
Life insurance provides a payment if you pass away during the policy term.
Many families use this to support mortgage repayments or protect dependants.
Unemployment cover
Some policies may include redundancy or involuntary unemployment cover.
However, terms differ significantly.
Questions worth asking include:
- Does the policy cover redundancy?
- Are there exclusions?
- Is there a waiting period?
- How long would payments continue?
- What evidence is required?
Why this matters for people aged 40 to 65
Financial commitments often increase during these years.
You may have:
- Mortgage repayments
- Children or dependants
- School fees
- Pension contributions
- Business costs
- Household expenses
A sudden change in income could affect short term finances and long-term goals.
Protection for self-employed clients
Self-employed individuals can face additional challenges because sick pay arrangements may differ.
Protection planning can be particularly important where business owners rely on their own earnings.
Questions to consider include:
- How long could savings last?
- Would business costs continue?
- What happens if illness prevents working?
Protection should evolve with life
Many people arrange protection once and never review it again. Yet circumstances change. Marriage, children, mortgages, salary increases and business growth can all affect requirements. Regular reviews help ensure cover remains appropriate.
Protection insurance is designed to provide reassurance but only if it reflects your current situation.
Understanding what you do and do not have in place today could make a significant difference tomorrow, book in for a free initial consultation today.
*Please note: Policies have exclusions and limitations. Conditions and eligibility criteria apply. Life assurance plan typically have no cash in value.