When your livelihood depends on one essential aspect of your life, it’s vital to make sure it’s properly protected.
This is something many celebrities, artists, and athletes have long understood. For instance, CNBC reports that “the Boss”, Bruce Springsteen, once insured his voice for $6 million.
Meanwhile, legendary Rolling Stones guitarist Keith Richards insured his hands for around $1.6 million.
For both, this meant that if they lost the ability to sing or play guitar, their incomes wouldn’t be at risk.
While you might not need to go to such lengths to protect your hands or voice, the idea is the same. When something is essential to your life, it deserves protection. As with Springsteen and Richards, that might be your ability to earn an income.
This is what keeps a roof over your head, supports your loved ones, and allows you to plan for the future.
So, continue reading to discover why it’s so important to safeguard your most valuable asset and explore some of the helpful protection options available.
It’s vital to prepare yourself for life’s many surprises
It’s easy to assume that as long as your life is going well, things will stay this way.
You might have a solid footing in your career, be paying off your mortgage, and supporting dependents. You may even be contributing to a pension or saving for a new home.
When your life feels stable, financial protection often feels unnecessary. However, you can never really know what life holds, and uncertainty might be just around the corner.
Indeed, serious illness can strike without warning. Macmillan Cancer Support reveals that an average of 412,400 people are diagnosed with cancer each year in the UK, translating to around one person every 90 seconds.
If your health prevents you from working for an extended period of time, even Statutory Sick Pay might not be enough to support your standard of living.
Without additional protection, you may find yourself dipping into savings earmarked for other purposes, derailing your progress towards your long-term goals.
In the worst-case scenario, you might be forced to rely on high-interest loans at a time when you should be focusing on your recovery, not worrying about snowballing repayments.
This financial strain can also affect your loved ones long after you’re gone. If you were to pass away without adequate cover, your family might struggle to maintain their standard of living or be unable to pay a significant Inheritance Tax bill, for example.
There are several potentially beneficial forms of cover to consider
It can be highly challenging to even think about such serious topics, let alone consider how they might affect you in the future.
Thankfully, protection allows you to prepare for them, potentially lifting a weight from your mind. Read on to discover three key forms of protection you might choose.
1. Income protection
Income protection pays a portion of your income – typically around 60% of your salary – if you’re unable to work due to an illness or injury.
This regular income could help you keep up with essential outgoings, such as food or household bills, without having to rely on your savings.
It can also give you some much-needed breathing room to focus on your health and recovery rather than worrying about any financial strain.
2. Critical illness cover
Critical illness cover pays out a lump sum if you’re diagnosed with a severe illness specified by your policy.
You might use this money to keep up with mortgage repayments or fund necessary adaptations to your home to suit your new needs.
While you may think you need income protection or critical illness cover, you may benefit from a combination of both.
Indeed, the regular payments from income protection could help you cover any essential expenses, while the lump sum from your critical illness cover could help with larger or one-off costs.
Having these protections in place could give you confidence and peace of mind that you’ll be able to manage a financial shock in the future.
3. Life cover
Then, there’s life cover. This ensures that your loved ones would receive a lump sum if you passed away unexpectedly.
While it’s never easy to think about, life cover can make a significant difference for those you leave behind.
For instance, it could help them:
- Pay for funeral costs
- Clear any outstanding debts
- Maintain their standard of living as they navigate a difficult time.
Knowing that your family would have this support can offer you genuine peace of mind, too.
Protection should ideally form the bedrock of your entire financial plan
When you first think about financial planning, you might picture investments, pensions, or saving strategies.
Yet, protection should always form the bedrock of your well-built plan. Without it, even the most carefully crafted strategies can quickly unravel.
Imagine you spend years saving and investing, only to be forced to draw those savings because you can no longer work due to illness.
This lack of protection could undo years of progress, forcing you to rebuild at a time when your energy should be focused elsewhere.
Conversely, having adequate levels of cover in place allows you to potentially preserve more of your wealth and maintain financial stability in challenging circumstances.
This is where working with a financial planner is highly beneficial.
We will take time to understand your situation, priorities, and concerns, then recommend suitable forms of cover that align with your lifestyle and long-term goals.
As your life evolves, whether this is due to a new home, welcoming a new member into the family, or any other significant milestone, your protection needs will also change.
We will conduct regular reviews to ensure your cover always remains effective for your unique situation.
Just as Keith Richards recognised the importance of safeguarding his hands, and Bruce Springsteen took steps to protect his voice, you too should ideally take action to protect your ability to earn and the wellbeing of your loved ones.
Please email us at info@investmentsense.co.uk or call 0115 933 8433 to find out how we can help.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Note that life insurance and financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
