August 10th, 2022
Protection payouts are increasing. Are you doing all you can to protect your wealth?
In the past two years, you may have had to deal with more uncertainty in your life than you’d like. The Covid-19 pandemic brought a heightened level of risk to everyone, and it may have made you consider what might happen to your loved ones if the unthinkable occurred.
Indeed, while it isn’t nice to dwell on morbid thoughts, more than 184,000 people have died from Covid-19 alone since the start of 2020 – equating to approximately 1 in 365 people in the UK.
In addition to taking protective measures against illness and injury in your personal life, such as wearing a mask, it is important to consider how your wealth could be affected by an emergency.
Read on to find out how protection policies are becoming increasingly reliable, and how to ensure your wealth is protected from the unexpected in 2022 and beyond.
Living without protection during the cost of living crisis could expose your family to unnecessary risk
If you became chronically ill and were unable to work for a long time, could your family continue to fund your lifestyle, particularly during the current uncertainty?
The cost of living crisis is on everyone’s minds at the moment, with the Office for National Statistics (ONS) reporting that UK inflation reached 10.1% in July 2022. You may have found yourself removing certain luxuries from your shopping list in recent months, or cancelling non-essential direct debits, in order to save money.
Although the cost of living crisis may make it more difficult to afford your monthly outgoings, living without protection could make your family vulnerable to additional risk.
Indeed, if you haven’t already taken out protection such as life insurance, critical illness cover, or income protection, it could be constructive to speak with your financial planner right away.
Alternatively, if you already have protection in place, you may be tempted to cancel policies to free up disposable income. A Royal London study reports that 95% of UK adults are “concerned” about the cost of living crisis, with 11% considering cancelling protection policies to save cash.
While it could seem logical to cancel policies that aren’t providing you with an immediate financial reward, in doing so you are leaving your wealth exposed to risk if you passed away or became ill. In turn, your loved ones could endure immense stress and financial loss if the unthinkable happened.
Protection payouts have increased for 3 consecutive years
In a world full of scams, you may be sceptical about the efficacy of protection policies. You may have had experiences in which you have tried to claim on an insurance policy, only to be met with a get-out clause you’d never noticed.
The great news is that, while compensation is never guaranteed, the number of protection payouts has increased for three consecutive years. According to FTAdviser, payouts increased by 9% in 2021, continuing the three-year upward trend of financial support provided to claimants.
The report claims the value of an average payout now sits at almost £15,000, with a total of £1.6 million a day paid in 2021. Indeed, insurers paid an overwhelming 98% of all protection claims in 2021.
In light of this uptick in protection payouts, you may be relieved to know that you are now even more likely to make a successful claim if you need to.
Maintaining your current cover, or putting appropriate new protection in place, could provide you with great peace of mind. If you were to become seriously ill or pass away, a payout could help your family stay financially viable.
In the event of the unexpected, an insurance payout could enable your family to:
- Continue paying the mortgage on your home
- Pursue opportunities in their own lives, such as attending university or buying a home
- Take the necessary time off to support each other in a time of need
- Pay for household bills and other essentials.
This injection of capital could stabilise your family’s lives in the event of an emergency, helping them to weather the storm more easily.
Protection can provide you with peace of mind
When it comes to taking out protection, fortunately there are countless combinations to choose from.
The potential downside of such a vast array of options, though, is that you may feel overwhelmed by choice. Luckily, your financial planner can work with you to put together a bespoke package of protection to support you and your loved ones.
By working with a professional, you could shore up your wealth against the unexpected, without falling into the trap of paying for unnecessary cover.
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This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.
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.