While the insurance policy you take out is for yourself, any payments are intended to help you and your loved ones. It’s important to be prepared for any eventuality, and to make sure you or your family will receive money if something does happen.
Think Through What You Would Want to Happen
Here’s where it gets unpleasant. Spend some time thinking through the implications of what would happen to your family if you die or get sick, then you can build a programme of insurance which covers each scenario.
All protection events – death, critical illness or being unable to work – really amount to the same thing, which is the loss of your income, either because you’re not around any more of because you can’t earn it due to illness.
If you die, your partner now has to continue without your income coming in, maybe with the same level of debt, if you haven’t provided for that. Or, if you’re single, your family have to manage your affairs and tidy things up without your input or income, and remember, debts need paying no matter what.
So, given your specific situation, think about what you would want to happen:
- Would you want all your debts paid off?
- Would you want to provide for your partner/family/friend/roommate? What would that look like? A tax-free income to support them? If so, for how long, and how much?
- If you have kids, could your partner, if you have one, support them alone?
- If you don’t want have a partner, would you want your parents to raise your kids? Would you want to supplement that with a lump sum or a tax-free income to help? If so for how long, and how much?
Spend a bit of time thinking about it, and say, ‘I would want to make sure that there was at least £X per year coming in until my youngest child is 25.” Or, “I would want to make sure my mortgage is paid off and another quarter of a million in the bank, so there’s no financial worries for my partner.”