How to financially protect your family if the worst were to happen

May 17, 2024

When you’re feeling fit and well, it can be difficult to imagine a time when you might be too ill to work or are no longer there for your family at all. However, none of us ever have any idea what life might have in store for us—for better or for worse.

But you might be new to protection cover, and have no idea where to begin. If that’s the case, why not start with this blog post? We’ll explain the fundamentals.

We’ve split the blog post into two sections. The first explains how you can protect your family in case you are taken ill and cannot work. The second explains what you can do to financially protect your family in case you are diagnosed with a terminal illness. The third covers life insurance. Feel free to skip ahead to the more pressing section for you.


Income protection insurance

If you are employed and cannot work due to illness, injury, or disability, you may be able to claim statutory sick pay (SPP). However, this might not cover all of your outgoings, particularly if you are the main earner of your household. You would, therefore, be right to look at income protection insurance, which you can claim in addition to SSP.

The income you are allowed to claim will not replace the exact amount of money you were earning before you had to stop working. Instead, you can expect to receive about half to two-thirds of your pre-tax earnings. This is because the income you get from the policy is tax-free.

You won’t be able to claim income protection payments right away if you fall ill or become too injured or disabled to work. Instead, you usually have to wait around four weeks, but it could take a lot longer than in certain situations—if you claim SSP, for example, which you can claim for up to 28 weeks after you stop work.


Critical illness cover

Critical illness cover provides a lump sum payment to you and your loved ones if you are diagnosed with or undergo a medical procedure for one of the critical illnesses we cover during the length of your policy – and you survive for 14 days from diagnosis.

The insurance provider you consult with will determine how much you receive and which illnesses and conditions are covered. For such an important task, cast a wide net to protect you and your family.


Life insurance

Life insurance pays out either a lump sum or regular payments on your death, giving your loved ones support once you’ve gone. Again, the amount of money paid out depends on the level of cover you buy:

Term of life policies. There are three types:

Level: Paid as a lump sum if you die within the agreed term. The level of covers stays the same throughout. This is the simplest and most affordable option.
Decreasing: The level of cover is reduced each year. This is designed for mortgage repayments where the outstanding loan decreases over time.
Increasing: The level of cover rises over the term of the policy to keep up with inflation.

Whole of life insurance policies:

These payout no matter when you die, as long as you keep up with your premium payments. They’re often used to help towards a funeral or for inheritance tax planning.

However, they are also typically more expensive than short-term policies, and there’s the possibility that if you live longer than you expect, you could end up paying more in than you’ll get out.


Get in touch with us

Are you ready to secure your family’s financial future? Don’t hesitate to reach out to us. We’re ready to help you navigate the intricacies of illness and life cover.

Get in touch with us.

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