The importance of protection

As a financial adviser, one of my primary goals is to ensure that my clients are well-prepared for whatever life might throw at them.

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A crucial part of this preparation is having the right protection in place. But what exactly does “protection” mean in this context, and why is it so important? Let’s explore these questions and shed light on the current state of protection among UK adults.

Despite the clear benefits, a surprising number of UK adults do not have adequate protection in place. Based on a recent study, it appears that only 7% of UK adults have critical illness cover or income protection insurance, while just 25% have life insurance. This means a significant proportion of the population is potentially vulnerable to financial hardship in the event of illness, injury, or death.

Why You Need Protection

Financial Security for Loved Ones

Life insurance is a cornerstone of financial planning. In the unfortunate event of your death, a life insurance policy can provide a lump sum to your beneficiaries. This money can be used to pay off debts, cover funeral costs, or simply support your family’s day-to-day living expenses. Without this safety net, your family might struggle to maintain their current standard of living.

Covering Critical Illness

Critical illness cover is designed to pay out a lump sum if you are diagnosed with a serious illness such as cancer, heart attack, or stroke. The payout can help cover medical expenses, allow you to take time off work to recover, or even make necessary adjustments to your home. Considering that 1 in 2 people in the UK will be diagnosed with cancer at some point in their lives, having critical illness cover can provide invaluable peace of mind.

Protecting Your Income

Income protection insurance ensures you continue to receive a percentage of your salary if you are unable to work due to illness or injury. This is particularly important given that Statutory Sick Pay (SSP) in the UK is currently just £109.40 per week – a sum that is unlikely to cover most people’s essential living costs. Income protection fills this gap, helping you maintain your financial stability during difficult times.

Why People Avoid Protection

There are several reasons why people might avoid taking out protection insurance:

Misconceptions About Cost: Many people believe that insurance is too expensive. However, policies can be surprisingly affordable, especially when you consider the financial security they provide.

Optimism Bias: People tend to believe that serious illness or accidents won’t happen to them. This optimism can lead to complacency, leaving individuals unprepared for unexpected events.

Complexity and Jargon: The insurance industry is often perceived as complex and filled with jargon. As a financial adviser, I strive to simplify these products for my clients, ensuring they understand exactly what they are paying for and how it benefits them.

Taking the Next Step

If you’re one of the many UK adults without adequate protection, now is the time to consider your options. The peace of mind that comes from knowing you and your loved ones are financially secure is invaluable. As your financial adviser, I am here to help you navigate the available options and find the protection products that best meet your needs and budget.

Protection is an essential component of a comprehensive financial plan. It safeguards your financial future and provides a safety net for your loved ones. Don’t leave it to chance – ensure you have the right protection in place today.

With Joe Carey, financial planner

Statistics provided by Charles Stanley via Vitality UK

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