There have been a variety of worries and unprecedented consequences of the coronavirus pandemic for many people and their families. One of the biggest concerns is obviously focused around health, closely followed by finances, with the economic disruption already experienced having had a significant impact on financial and job security.
The government have introduced various measures such as the job retention scheme and easing the restrictions on accessing Universal Credit to help alleviate the financial stress facing many of the population and minimise the financial damage in the short term for companies.
Further to this, a number of lenders have been offering ‘payment holidays’ on mortgages, with banks freezing overdraft charges too in an attempt to help those facing financial hardship.
Many people were already in a financially vulnerable position before the pandemic, as over half of those seeking advice from debt charity StepChange during 2019 were in some form of employment. So, with the coronavirus crisis widely expected to trigger an economic recession with the potential for a sharp rise in unemployment, this could have serious implications for personal and household finances.
Too few people are actually prepared for any kind of emergency which could affect their finances, and don’t have necessary systems in place to support them should something happen. According to Royal London’s State of Protection Nation report (June 2019), only 2 in 10 people who have a mortgage have some income protection in place, while 4 in 10 don’t have any life insurance.
Protecting you and your family doesn’t have to be pricey. The coronavirus pandemic has taught us all how easily we could become ill and be unable to work, could you afford to protect against it?
For some people it is the cost, or perceived cost, of protection that puts them off, but you can find good value for money and different ways of lowering or managing the cost.
For others, it can appear to be an intimidating topic, especially life cover. With many people struggling to understand the difference between life insurance and life assurance it’s not surprising The main difference between the two is that life insurance is cover for a set term, whereas life assurance covers you for life, which is why it is often referred to as whole of life cover.
Many of you will have seen policies for whole of life advertised on TV, usually aimed at over 50’s to help with funeral costs, but these plans can do much more than that. You can use them to pay off a mortgage or other loan, help protect against the early death of a partner or parent, especially when there’s financial responsibility for children. They can also be used to help cover the cost of an Inheritance Tax (IHT) bill.
Whether you choose life insurance and life assurance, it’s typically cheaper to get this whilst you are younger. The policy right for you will depend on your circumstances and the type of cover you’re looking for, it’s always best to speak to your financial adviser about this.
The coronavirus crisis has further highlighted how important it is to review any existing cover you have on a regular basis, to ensure this still meets your requirements. Many people suffer from a ‘protection gap’, which is basically the difference between the insurance cover that people would ideally have and what’s actually in place. This means should anything happen, the protection you have won’t fully cover your needs, leaving you open to a potential shortfall in cover.