Are you under insured?
According to the latest figures from 2020 – the UK is under-insured.
Each year the Association of British Insurers (ABI) publishes a summary of the UK insurance industry, which shows that it paid out more than £6.2 billion in protection claims in 2020 – a £438 million increase from 2019, with 98% of all claims being paid out.
Whether it's Life Insurance, Critical Illness Insurance, or protecting your mortgage, it’s important to protect your family’s financial future. But many do not.
In the words of Benjamin Franklin ‘In this world nothing can be said to be certain, except death and taxes’. But do we really want to think about this? The hope is that we all live to a ripe old age. But what if you don’t, then what?
Well, if you don’t have insurance now you may need to re-consider. One of the big questions to answer is – what would happen if your income was removed from the household? If the answer is that this will likely cause financial stress on your family or yourself, it’s time to do something about it.
Also, things change all the time, so even if you are fine now, it’s important to take stock of your finances when there are significant life events coming up, such as:
- Getting married
- Buying or upgrading a new home
- Taking out a mortgage
- Birth of a child
- Change in your personal health
And, even if you don’t have people that rely on you, you should consider protecting yourself.
Currently there are 10.9 million households in the UK with mortgages, and 42% have no insurance in place. Have you considered how many months it would take before your family are unable to meet the mortgage payments and possibly end up losing the home altogether?
It’s a good idea to understand you and your family’s financial exposure to income shocks caused by being left unable to work – you will then be best placed to understand what type of cover you may require.
Every household’s expenditure is slightly different. In January 2020 the estimated average mortgage debt was £132,242. Once you start to include household and food bills you start to build a picture of what it will take to run a household.
But, it’s not always about the costs of running a household. If you have children, there are extra costs you need to consider. According to the Child Poverty Action Group 2020 report, the additional full cost that a child adds to a household, over 18 years is just under £153,000 for a couple, or over £185,000 for a lone parent. This is once childcare is taken into account.
No wonder that repossessions are on the up, with 'This is money' reporting that houses being repossessed has increased by 134% at the end of 2022.
There are a range of protection products out there, so if you are looking to cover yourself or your mortgage, here’s an explanation of the products that Foresters offers:
- Life Benefit - This covers the Planholder for death and terminal illness. There are options to pay out either as a lump sum or in monthly instalments.
- Critical Illness - Covering the Planholder for total permanent disability and a range of critical illnesses.
- Combined Life and Critical Illness Benefit - Covers the Planholder for death or terminal illness, Total Permanent Disability and a range of Critical Illnesses, paying out on the first event to happen.
- Mortgage Protection - For many of us, a mortgage is the biggest financial commitment we’ll ever make. Our Mortgage Protection Plan can be used to repay a mortgage in the event of death and may include Critical Illness (to cover Total Permanent Disability and Critical Illness).
And if you have decided to proceed, make sure you consider future costs. Our article 'Calculating the Cost of Life Insurance' may help you consider the things you need to think about. Protection Plans are not always as expensive as you think. But be aware that it’s not always best to go with the cheapest policy.
Always read the terms and conditions of any protection policy you take out. So if it’s Critical Illness, be aware of what illnesses are covered. Cancer continues to be the highest cause of critical illness.
Whatever you decide upon, things change and most advisers recommend that you review your protection arrangements at least once every 12 months or if you have any significant life events – you can then be sure that you have the most suitable option available to you.
How can Foresters Financial help?
Our Financial Advisers will be able to visit or call you at your convenience. They will be able to help you determine the level of cover you require to suit your needs and will be on hand as your financial circumstances change.
You Financial Adviser will go through your protection options and explain the application process and arrange an appointment with MorganAsh who will underwrite your Plan. These is no direct charge for protection advice. Request a Financial Adviser >
We offer access to a Peace of Mind service if you have a Protection Plan in place with us. This free specialist advice service is staffed by experienced nurses who are on hand to provide expert help and guidance should the worse happen. Additionally, a partner and/or children will also be able to access the bereavement counselling service, with up to six sessions at no cost.
However, please note the Peace of Mind service is not regulated and is a non-contractual benefit. It is not part of the Protection Plan Terms and Conditions, so may be amended or withdrawn at any time.