Article by Jennifer Arthur
What is your biggest asset… your home, car, savings? Most people don’t consider their income as an asset. When I multiply a client’s income until retirement it can be shocking to see their own worth in terms of providing for themselves and their family. I recently saw a 30 year old client who wanted to start a pension as she realised she could not live off the current state pension of £155pw as she was earning £30,000 now. The client being single had no form of insurance. When I pointed out that she would earn an excess of £1m (ignoring salary rises/promotion) before retirement she was totally stunned. Protecting that income stream became her number one priority.
No two people are the same and the type of protection you need will depend on your personal circumstances and stage in life. Your age, marital status, health and whether or not you smoke, are just a few examples of the elements you need to consider.
To work out whether you need protection and what type of protection you might need, it is important to look at the whole picture. What savings do you have? Do you have a mortgage or any debts that you need to pay? Do you already have any insurance products, and if so what do they cover? This is why each financial review is bespoke to each client, and best advice is to have a review every year so advice can be tailored to match your life changes.
“More than one in six working families would receive little or no help from the state and see their income drop by a third, if the main earner was unable to work.”
Source: ABI
Myth – I’ll never need it
It is tempting to think that you’ll never need insurance, but unfortunately no one is immune to things going wrong.
- Every year close to 1m workers in the UK unexpectedly find themselves unable to work because of injury or illness. The average income protection claim is for 4 years!
- Studies by Cancer Research UK have shown that 1 in two people born after 1960 will be diagnosed with a form of cancer during their lifetime.
- According to Mind one in four people in the UK will suffer from a mental health problem this year.
These figures can give you an idea of how important it is to make sure you and your family have a financial safety net in place should something happen to you.
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