With recent uncertainty in the world, protecting yourself and your family has never been more important. Of course, it’s not something many people want to think about — what happens to your family if you get sick and can no longer work, or what might happen to them if you die – but these times are what your wealth protection and preservation plans were designed for.
If you don’t have a plan, it’s crucial that you work with an adviser to come up with one that will respond to your worst-case scenarios.
If you do have a plan, it’s important to remember that securing coverage isn’t just a once in a lifetime thing. Now is a good time to review your policies and update them based on changes in your circumstances and the insurance world.
The unexpected could happen to anyone
Doctors don’t usually have warning about the high potential of becoming ill or being unable to work. It’s not the most pleasant topic — how your family will survive financially if your main source of income is cut suddenly — but do you have a plan for handling finances if you get ill now?
When you’re not able to work, worrying about money should be the last thing on your mind. You should be focusing on recovering, not how to cover your living expenses. While you should, of course, have savings tucked away, income protection, critical illness cover, and life cover should all be part of your master financial plan.
According to the 2017 Aviva Protecting our Families report over one-quarter (27%) of families have experienced a loss of income due to illness or injury.
The same Aviva report revealed some surprising statistics about income protection: 20% of parents who have lost their income due to illness or injury have been forced to downsize, move in with family, or rent smaller accommodations than they need – some have even become homeless and 1 in 3 families could not survive just one month without the income of their main provider, even if they only spent the bare minimum needed to get by.
You could even face unwanted financial stress in a household with two incomes. These days, most families are accustomed to both partners working. In the event that the one partner loses their normal income, their family’s financial stability — either short-term or in the long-term — could be in jeopardy.
Even though you won’t be able to work, and money won’t be coming in, your bills still will keep coming and money will still need to go out. But not having the means to pay for all your family’s needs is an avoidable problem.
Ensure your family is covered – your options
When you’re considering your options for protection policies, it’s always preferable to take out income protection alongside critical illness cover, and life insurance – so you cover all bases.
The truth is that many people wouldn’t be able to survive on their savings or on sick pay from work alone and most don’t have any alternative plans. However, you also have to balance affordability of insurance with your own priorities.
76% of parents have no financial plan for dealing with lost income to due ill health and two-thirds lack a plan to deal with the finances after the death of their partner (Aviva).
If you don’t already have wealth protection policies in place, there’s never been a better time to secure coverage. And if you’re already set up with policies, make sure you’re regularly reviewing your policies so you can have the best the market has to offer.
Stay up to date with coverage
It might not surprise you that when financial advisers review a client’s existing insurance plans (or legacy contracts), you can almost guarantee they’ll need to recommend new ones.
Darren Scott-Guinness, our expert financial adviser says “Legacy contracts will most likely need to be replaced because often policies are more than two years old. The insurance industry is actually quite dynamic and is constantly innovating and improving their products to better serve the people it represents.
I highly recommend that you sit down with your trusted financial partner to review your policies every 2 years. There will be policies with more comprehensive coverage, more tailored coverage at more competitive prices available for you to benefit from”.
Advantages of reviewing your protection cover now
More conditions covered – Reviewing your policy can have advantages, one being that new policies on the market become available with additional conditions included under the cover. However, it’s worth considering whether the extra ailments are worth any extra cost. Nowadays insurers have begun lumping conditions under a wider umbrella, so counting conditions doesn’t hold the weight it once did.
Child cover – Insurance providers have also added products and services to their offerings. Importantly, children’s cover has been beefed up significantly — increased child cover, improved plans that cover children from birth and specifically include congenital conditions and certain pregnancy conditions, plus payments when a child is hospitalised and a new child death benefit.
Additional benefits – Virtual GPs, second opinions, mental health counselling and other health and rehabilitation benefits are all services that didn’t exist ten years ago. Multi-tiered plans also became available in the last decade.
More options – Now you have the option to choose between standard and comprehensive coverage – but keep in mind the increased premiums you’ll pay for the added coverage. Gone are the days where bare-bones insurance coverage will suffice for anyone.
If you’re looking for peace of mind for you and your family in the current challenging time and beyond, speak to us about wealth protection in your financial plan.
Protecting your income is one of the most important elements of financial planning for medical professionals as the inability to work will likely lead to financial trouble.
As independent financial advisers, we can help make sure you’re ready to face any eventuality. Darren Scott-Guinness is available to discuss your finances at a time to suit you. With his expertise and experience working with medical professionals, he can give you the reassurance and guidance you need.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. Dental and Medical Financial Services is an appointed representative of Best Practice IFA Group Limited, which is authorised and regulated by the Financial Conduct Authority.