Protection is one of the foundations of Financial Planning, however, it is often overlooked as one of the least exciting elements, with Pensions and Investments at the forefront of many people’s minds. But what good is building the pillars and the roof if the foundations aren’t in place yet?
If you take a moment to consider how much you are worth over your lifetime, you are most likely to be the most expensive asset that you own! For example, if you started earning £30,000 at age 20 and this rose with inflation each year (approx. 2.5%), by the time you retire, say at 65, you would have earned £2.5m! I f you owned something worth £2.5m would you get it insured? You are darn right you would!
Insurance can be a bitter pill to swallow for many because so many types of insurance rely on something bad happening. For example, with insurance for critical illness cover, you will pay a monthly premium, but you will only get a payout if you have a critical illness. Now, no matter how high the premium per month, nobody will be praying they get that payout. But having the reassurance of insurance such as critical illness cover, and the knowledge that you and your family won’t have to worry so much about paying the bills, could certainly put you in a better frame of mind for your recovery.
Assurance, on the other hand, is something that will pay. For example, whole-of-life assurance that pays out on death will pay out – newsflash: we will all die at some point; sorry to burst the bubble of the eternal optimists. This form of insurance may be more comfortable for people – knowing that they will get some of their premiums back at some point, at least for the family they leave behind.
What type of insurance you need will depend entirely on your situation: those with young families will have different priorities, affordability and needs than those whose children have left home and who may be retired, or even those who have no children. Whether it be family protection, income protection, critical illness cover, life cover for inheritance tax, life cover to pay the mortgage … it is worth considering what type of insurance you may need when looking at your financial situation as a whole. Make sure your foundations are solid and can withstand the storm that life throws at you before you build your life on top of it.
Redwood is one of the Souths’ leading Pensions, Investments, Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning and Probate, we can advise on any situation. Join us at one of our Free Public Information Seminars: Book online Book Me A Place!, Call us on 01489877 547 or Email firstname.lastname@example.org to book a no-obligation Initial Meeting with us to review your financial planning needs.