The Importance of Insurance

23/11/2024

How would you or your family manage financially if something was to happen to you? This could be death, serious illness or disability.

A lot of people in the UK view insurance as a non-essential expense (other than the car and home insurances we are legally required to take out). In my opinion, life insurance should be viewed as essential.

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.

There are 3 main types of insurance that have various different purposes

Life Insurance

This is insurance that is paid out if the policyholder dies during the term of the policy. It can be paid out as either a lump sum or a regular monthly income depending on the policy type.

Normally you would insure your life to make sure that any dependents are not financially disadvantaged should you pass away. This can include covering your life for the value of your mortgage to ensure that your family is not burdened with a mortgage should you pass away unexpectedly or replacing your household income via a monthly payment.

Critical Illness

Critical Illness cover, sometimes described as Serious Illness Cover, pays you a lump sum if you are diagnosed with a serious illness. The most common payouts are for things like cancer, heart attack, strokes, MS etc. It could be used to pay off debts, and medical bills or used as a financial buffer should you be unable to work while receiving treatment.

Income Protection

This cover is designed to replace your income if you are unable to work due to illness or accident and will pay you a pre-defined monthly amount after a specific term. Income Protection is often overlooked but, in my opinion, everyone with an income should have it. Think about the financial impact on you and your household should you be unable to work long-term. If you have any savings they would be spent, and then you would be left with nothing except to rely on government benefits which may not cover your bills.

Summary

Like with house and car insurance I view life insurance as a must for everyone. If you would like to discuss what’s best for you and your family please contact me.

Matt