Unfortunately, we cannot predict the future and that means that life is full of all sorts of uncertainties, however, we can take steps to protect ourselves and our loved ones from unexpected financial hardships.
This is where protection insurance steps in. Protection insurance brings peace of mind by offering financial security in times of need. In this article, we will cover some of the most common types of protection insurance coverage that you can get, why you should consider getting the right type and level of coverage, along with the pros and cons, and how you can start to determine the right amount of coverage for your unique situation.
Common Types of Protection Insurance
There are several types of protection insurance available, each designed to address specific risks and needs:
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Life Insurance
In the event of death, life insurance will provide a lump sum payment to the beneficiaries of the policy. It is there to offer financial security to loved ones and can be used to cover things like funeral expenses, outstanding debts, and ongoing living expenses due to the loss of income.
Another form of Life Insurance is called Family Income Benefit. This policy benefit sum is paid monthly to the surviving dependent to help maintain a standard of living, often used if the main wage earner dies with a policy running until children become independent.
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Critical Illness Insurance (CIC)
CIC pays out a lump sum amount if the policyholder is diagnosed with a critical illness that is specified in the policy. There may also be an option to have any payments be paid every month rather than in a lump sum amount. CIC aims to either repay a mortgage liability, help cover medical costs or treatments and other financial obligations during a serious illness.
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Income Protection Insurance
Income protection insurance (thought of as a personal sick pay) is there to replace a portion your income if you are unable to work due to illness or injury. It helps ensure ongoing financial stability thereby covering everyday expenses.
How Can You Afford To Not Be Protected?
Nobody likes to think about what will happen when they die, if they become terminally ill, or are unable to continue working and support their family. But it is an essential thing to think about when looking into your finances.
Protecting your finances offers you:
Financial Security: Nobody wants to worry about money when they need to focus on getting better or planning a funeral. Getting the right protection insurance ensures that your loved ones have financial support during this tough time.
Debt Coverage: Your protection insurance payment can cover outstanding debts, such as mortgages, loans, and credit card balances, preventing your family from shouldering the burden.
Peace of Mind: It gives you peace of mind knowing that you and your family are financially resilient, allowing you to focus on recovery and maintaining a high quality of life.
The Pros and Cons of Protection Insurance
Pros:
Provides You with Financial Security: Protection insurance provides a safety net for you and your family in times of crisis.
You Can Get Tailored Coverage: You can customise your policy to address specific needs, ensuring you’re adequately protected.
You May Get Tax Benefits: Some protection insurance policies offer tax advantages, providing potential savings.
Cons:
Complexity: Understanding the various policy options and terms can be challenging, so professional guidance is often recommended.
How Much Protection Insurance Should You Get?
It varies from person to person and depends on many factors as to how much cover you need. You need to consider things like your financial situation, family size, and lifestyle. But to make things easy to start with you should at least consider the following things:
- Evaluate Your Debts: Calculate all of your outstanding debts. Include things like your current mortgages, loans, and credit card balances.
- Assess Your Income: Think about and determine how much income your family would need to maintain their standard of living in the event of a loss of income due to death or job loss.
- Consider Your Expenses: How much does it cost to run the house on a day-to-day basis? Account for daily living expenses such as utilities, groceries, education, and healthcare.
- Think About Future Needs: What about things that you need in the future? Such as college tuition or retirement savings. How much are these things going to cost?
- Consult an Expert: Once you have covered these it is time to speak with a protection advisor who can help you assess your unique situation and recommend an appropriate level of coverage.
Thank you to our dedicated Protection Advisor, Tracy Clayton, who has contributed and reviewed information that is within this post.
Here at Quick Mortgages we are there to make the process of getting your essential insurance needs met as simple and pain-free, whilst making sure that you have all the coverage that you need based on your personal needs.
Now that you are ready to protect your future, contact us today to discuss your protection insurance needs and receive personalised guidance to ensure you have the right coverage in place.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
