Protection: Key questions to ask yourself about your arrangements
Posted on 21 October 2015 by
When’s the last time you looked at those insurance policies (like life cover, critical illness etc) that you are paying for on a monthly direct debit? Through conversations with my clients about protection, I have learned that in some cases the payments just come out and are then forgotten – sometimes the policies themselves are actually forgotten, having been moved from one provider to another, and it’s only when I ask the question during a mortgage interview that memories are dredged up.
It worries me that so many clients have no idea as to how much cover they have – it worries me even more that most people have absolutely no idea as to how much cover they and their family actually need; because its not just your mortgage or debts that need protecting, you need to think about your income and lifestyle as well.
I appreciate that this is rather morbid, and when I ask the question what happens to your family if your income stops if you are unable to work through accident or sickness I can feel the discomfort float across from my client. Common responses to the above range from I’ll deal with it when it happens to I’ll just sell the house and downsize or my family will take care of me. Well, your family may well be able to support you, but when I follow that up and ask what discussions have been had in relation to the level and length of support available from the family, there is usually another silence.
If someone is so ill that they are unable to work for a prolonged period then people have a range of ways of coping; and yes, downsizing may be one option, as well as reliance on family.
However there are other options, including a life and critical illness policy, family income benefit or income protection to make sure that you have some financial security.
Finally, when you’re confident in your back up plan, the next step is to conduct regular reviews of your policies, especially if your circumstances change. This ensures you have the right amount of cover and that all your protection needs are accounted for because there is nothing worse than thinking you’ve got the right insurance in place when you haven’t.
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