What is financial protection?

Well, it isn’t just about paying for something that isn’t relevant to you. It’s not just about the money. 

Whether we like it or not, we’re not invincible. 

As careful as we think are, there is the possibility of something happening that would put our lives in turmoil. An accident or injury could result in time off work which could eventually equate to not receiving your full salary.

So isn’t better to prepare for the worst, even while hoping for the best? After all: if you have a mortgage then buildings insurance is a condition of the mortgage (even though we’re not expecting anything to happen to our home). And car insurance is mandatory – even though we’re not driving around intending to have an accident and claim on the insurance.

So, what is financial protection?

It’s first and foremost peace of mind. It’s about protecting your lifestyle, family and wealth. 

“How exactly does that work?” (I can hear you asking!)

The Cambridge dictionary describes peace of mind as: “a feeling of calm or not being worried”. Knowing you’ve covered all the bases in terms of possible financial disaster is definitely going to give you a calmer mind than worrying about the worst happening!

So, financial protection helps protect your wealth by providing you with money in the event you’re diagnosed with a critical illness, it provides an income in the event you’re off work for a long period of time and meet the claim criteria, or in the worst case, in the event of your death. 

After all, why would you want to deplete your hard-earned savings to pay the mortgage in the event your earned income isn’t enough if you’re off work temporarily due to sickness? Your savings (your wealth) has probably been accumulated for something special – not for the mundane day to day expenditure. 

Money provided by financial protection (either a lump sum or regular income) can help cover the payment of debts. With a monthly income you’ll have the funds to make your regular payments. Or with a lump sum, you could event get rid of the debt or mortgage completely.

In the unfortunate event of your death, having financial protection in place can safeguard your family by providing them with money to be able to maintain their lifestyle. After having suffered your loss, do you want them to have to sell up and downsize because they can’t afford the mortgage payments or day to day expenses of living in the family home?

If you’re a business owner with partners, what happens if one of the partners dies or is off sick? How will your business manage if one of the partners is unable to work or worse dies?

In the event of death the partner’s shares are likely to pass to their spouse or partner. They are probably going to want to sell their shares.  Do you have enough money to be able to buy the shares and prevent the shares being sold to an unknown third party? 

Having a share agreement in place can make things simple and painless and safeguard your business in the event of the worst happening. 

We all like to think “I’ll be ok, nothing’s going to happen”.  But the truth is, awful things happen to people all the time. 

Take a look at the Risk Reality Calculator for an indication of what may happen to you before you retire (average statistics simply based on your age and smoking status) and see whether you’d like the peace of mind of financial protection in the event it does happen to you.

Please feel free to get in touch if you have any questions or would like to review your financial protection.