There is generally always a need for financial protection, no matter what your age, and as we are living and working much longer, there is more of a requirement for protection into later life. George Square Financial Management explains the various protection options and why you should put a protection plan in place sooner rather than later.
Life insurance (or life assurance) is designed to provide financial protection for your family and other people who may depend on you for financial support. It pays a death benefit to the beneficiary of the life assurance policy.
If you have dependants, or outstanding debts such as a mortgage, at the very least the level of cover should ensure your family can keep their home. Ideally, it should also provide an additional sum as a financial buffer at a difficult time.
There are different types of life insurance policies available. These range from ‘whole of life assurance’ which covers you for your entire lifetime, to ‘term assurance’ policies, which provide life cover for a fixed period of time – 10 or 20 years, for example – and are often used in conjunction with a mortgage. Selecting the right policy for you is best discussed with a qualified financial adviser to ensure you receive the most appropriate level of financial protection.
Critical illness cover
It’s easy to think that you’ll never be diagnosed with a critical illness, particularly when you feel healthy and energetic, but any one of us could fall ill with very little warning. It makes sense therefore to protect yourself and your family from the financial fallout as best you can.
Critical illness cover pays out a tax-free lump sum if you’re diagnosed with, or undergo surgery for, a specified critical illness that meets the policy definition.
Income protection cover is designed to give you financial protection if you can’t earn an income due to ill health, a sickness or disability. Policies protect a portion of your salary, typically paying out between 50-70% of your income. You receive monthly, tax-free payments that cover some of your lost earnings if you are unable to work.
Income protection is a long-term policy, sometimes called permanent health insurance; it is not the same as critical illness cover, which pays out a one-off lump sum if you have a specific serious illness.
So, is it ever too late to get financial protection?
In short – no, and we would always encourage our clients to protect their finances wherever possible. However, as life progresses and changes, we start a family, grow a business, take on mortgages and business debts etc, the need for financial protection often becomes more relevant as we become more successful and grow our lives. It is often in our 40-50s when the need is greatest.
It’s true to say, though, that all types of protection get more expensive as you get older; the likelihood of having had an illness or medication increase and the term to which you require cover pushes into old age. As such, there is certainly an argument to acquire suitable levels of cover before age 45, where you start to see a strong up curve in expense.
Take action now
Putting a financial protection plan in place sooner rather than later is always the better option, but no matter what your age, you should look at how best to protect you and your family.