You wouldn’t think twice about protecting your home or your car…or your cat! But surely it’s just as important to protect your lifestyle?
When we say lifestyle, we really mean your income and your potential future income. After all, your income is what you and your family rely on to keep a roof over your head, pay the bills, buy the groceries and all those other essential things that get you through life!
What would happen to your income if you were unable to work due to illness or injury? Or if the worst should happen and you were to pass away, would your family be able to carry on living the same lifestyle that they currently enjoy? If you are the main breadwinner for the family, a loss of income could lead to serious financial difficulties.
So what can you do to future-proof your lifestyle?
Protecting your income
Firstly, let’s take a look at Income Protection. If you are unable to work, Income Protection is designed to give you an income during this period of absence.
Some people may have an employer sickness scheme that offers some protection, but not everyone has this benefit. You are entitled to claim Statutory Sick Pay, however if you are currently paying off a mortgage or have rental payments to cover, this amount is unlikely to cover all of it, let alone other household bills on top of this.
Depending on how long you have to take off sick, you may choose to use your savings (if you have them) to cover your outgoings but a long-term illness could soon eat into your nest egg. Unfortunately, nobody can predict what is going to affect us – it could be an illness that lasts for a few weeks, or if something a lot more serious, you could be out of work for several months, in some cases indefinitely.
Income Protection is designed as a long-term solution, covering you until you return to work or until you reach retirement age whichever is the earliest. It’s certainly worth considering income protection if you don’t have any other form of financial protection and you are worried about the effects of illness on your financial situation.
Looking out for your family
Now for the hard one. No one wants to think about an untimely passing but it’s something that you should consider planning for, particularly if you have a partner or dependants that largely rely on your income.
Life insurance can be a solution to this. Many people choose to insure themselves when major changes happen to their lifestyle, such as starting a family or taking on a mortgage. No one wants to see their family put into financial difficulties should the worst happen, but being left with mortgage payments to be paid and mounting bills can be difficult when an income has been lost.
Protecting yourself with life insurance can help to ease the difficulties during a highly stressful and emotional time. It may not be something that you really want to think about, but being able to pay off the mortgage, or leaving a lump sum for your family is a practical legacy to leave behind if you are no longer around.
The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media.