Life insurance is often considered a non-essential expense, particularly among young families, but have you considered how you and your family would cope if you suddenly lost your income?
According to a survey conducted in April this year, more than half of men in the UK with dependent children have no life insurance in place, meaning their families could be left in a precarious situation if the unforeseen were to happen. And, worryingly, this figure is increasing year-on-year. Additionally, only 18% have a critical illness policy, leaving many households where the father is the main earner facing financial hardship if they were to become seriously ill and lost their income.
A risky position
The impact of losing the family breadwinner can be devastating – missed mortgage payments, savings depleted, the family home being sold, standard of living eroded, with stress and worry all too evident. Despite this, many fathers (who account for two thirds of UK family breadwinners) don’t consider having insurance as a necessity. Instead they would rely on savings, even though some admitted that this would only cover three months worth of bills. What’s also worrying is that nearly half of these men don’t have the protection of a Will, power of attorney, guardianship or trust arrangement in place for their families. In our opinion, this is an especially risky position.
Make sure the people and things that matter to you are taken care of – whatever life throws at you
Life is full of uncertainties – and while we insure cars, houses and even holiday arrangements, when it comes to ourselves and our family, often insurance is overlooked and undervalued. The simple truth is we can get too ill to carry on working or tragically die too soon, either through serious illness or accident. These events are random, and they can potentially affect us all.
The value of protection is to provide peace of mind about having financial security in place for your dependents. Life insurance and critical illness cover will ensure your family is provided for, should the unforeseen happen to you.
Life insurance – A life insurance policy usually only pays out if you pass away. It’s designed to help families maintain their lifestyle after an earner has gone, for example, to pay off a mortgage or other loans and provide financial security for dependents.
Critical illness insurance – Critical illness cover pays you a lump sum in the event that you are diagnosed with a critical illness. It could be used to pay the bills or pay off debts should you lose your income due to long-term illness. It doesn’t usually pay out if you pass away, therefore it wouldn’t be suitable to provide for a family after you’ve gone.
Many insurers will offer a combined life insurance and critical illness policy to cover against most eventualities.
Recent changes to bereavement benefits and their continued unavailability to those in cohabiting relationships, mean that it’s more important than ever for family breadwinners, whether that’s mothers or fathers, to review their financial protection needs and seek advice to make sure their household is covered.