If you were asked to name your biggest asset, you’d probably say it was your property.
From a tangible perspective, this is likely to be true. The seemingly inexorable rise in property values means that the Land Registry are now confirming that the average UK property value is getting close to £300,000.
But an alternative view is that your biggest asset is your family.
Admittedly it’s not possible to quantify that value in pounds and pence. But in terms of what they add to your quality of life, and emotional wellbeing, there’s a good argument to suggest that their value is incalculable – and so well worth protecting.
With that being the case, it’s important that you’re able to care for them. Your regular income ensures they are protected and enjoy an excellent quality of life, but what happens if that is interrupted for any reason?
Read on to discover more about some of the steps you can take to help protect them, should the worst happen.
1. Make sure you have an emergency fund in place
Your first priority should be to set aside a sum of money to cover essential or unforeseen expenses in the event of an emergency.
A rule of thumb is that this should be between three- and six-months’ net household income. Putting this aside gives you some crucial breathing space if your income is interrupted, or if you’re faced with an emergency requiring an immediate outlay of money.
If you’re unable to work for any reason, a fund like this ensures you can pay essential bills, at least in the short term.
2. Ensure your income is protected
If you were to fall seriously ill and be unable to work, according to the government website the current rate of Statutory Sick Pay (SSPI) is currently just £99.35 a week, payable for 28 weeks.
With rising prices, that’s barely enough to cover a weekly food shop for a family of four.
If you’re employed, it’s possible your employer may offer some form of sick pay that would continue your monthly income payments for a certain period. However, this is likely to be time-limited.
If you’re self-employed, it’s usually the case that if you’re not working, you aren’t earning.
Keeping your fingers crossed and hoping for the best when it comes to your health and ability to work, may not be enough.
It’s a fact of life that the bills don’t stop coming in if you have a serious accident or suffer a long-term illness.
That’s why you should think seriously about insuring your income with protection that will pay you a regular amount if you’re unable to earn money for an extended period of time.
Such a plan can help ensure that you can still pay your essential bills for the length of time you are unable to work.
When it comes to protecting your most valued assets, this type of protection can go a long way to reassuring your family (and you) that they’ll be able to look after themselves.
3. Protect your family in the event of a serious illness
As well as protecting your income in the event of you being unable to work for an extended period, you should also consider what would happen if you were diagnosed with a more severe illness. This may be something that could leave you unable to work at all – maybe ever again in your current role.
To guard against this possibility, critical illness protection will pay out a substantial lump sum in the event of you suffering a serious illness such as a stroke, heart attack, or cancer.
It can also potentially help support your rehabilitation and make adjustments to your home.
With the correct level of cover, you can even make sure you can pay off your mortgage, as well as providing an additional sum to meet other ongoing family needs.
4. Make sure you’re prepared should the very worst happen
Life insurance, set up to pay out a lump sum to your family in the event of your death, gives you the reassurance of knowing that you’re providing for your family even if you aren’t there.
It also gives comfort to your family as they can be secure in the knowledge that they should have no financial worries when you die.
Furthermore, they’ll have one less thing to worry about at a time of great stress and upheaval as they cope with your death.
It means that they can lead the life you’ve created for them, even if you aren’t there yourself to enjoy it.
5. Make sure you have a will set up
According to research reported by Unbiased nearly 6 in 10 UK adults don’t have a will.
Given how straightforward, and relatively cheap a will can be to set up, that’s a remarkably high figure. Dying without a will in place could result in long-term legal wrangling for your family when it comes to the distribution of your assets after your death.
By making a will you can help avoid such disputes and ensure that your wealth passes to your nominated beneficiaries quickly and with the minimum of fuss.
As well as having a will, you should also ensure that you’ve completed expressions of wish and death benefit nomination forms for all the insurance and pension policies you hold.
Get in touch
If you’d like to talk through your options regarding what you’ve read about in this article, please get in touch with us.
This article is for information only. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances. All contents are based on our understanding of HMRC legislation, which is subject to change.
Note that life insurance 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.