Protection plays a key role in financial planning. Here's why and what to consider


Sometimes, ignorance truly is bliss, and it can be nice to forget about the stresses of everyday life.

However, when it comes to your finances, the opposing mantra of “prepare for the worst” could save you from harmful consequences that unexpected life events can bring.

A financial protection plan is a great way to provide yourself with reassurance and an income to tide you over. It can help you lessen the potential for unpredictable events to turn your financial circumstances upside-down.

Read on to find out more about which measures you can take to protect yourself and your loved ones and why they’re so important.

A protection plan could help provide your children with a comfortable future

In any context, having a plan can make your situation clearer and give a point of reference in confusing times.

It’s especially important to formulate a plan for your finances as, without one, you could put your hard-earned money at risk.

Since it’s impossible to predict the future, unexpected circumstances could harm the funds you’ve tirelessly built throughout your life. This means that factoring protection into your financial plan could save your finances in a crisis.

Many different types of protection are available that could protect your finances. Some can give your family a large payout when you die, while others can help ensure you are paid a consistent salary if you’re suddenly unable to work.

While it’s tempting to believe that the worst won’t happen to you or your family, no one is entirely immune to poor health or premature death.

To highlight this in stark reality, Cancer Research found that 1 in 2 people born in the UK after 1960 will be diagnosed with some form of cancer in their lifetime.

It could be a mistake to underestimate the value of having the right protection in place. Scarily, YuLife measures that only 30% of Brits have life insurance. And even fewer see the need for income protection with as little as 6% of the country enrolled, according to This is Money.

Life insurance can help give you and your family peace of mind

While no one likes to think about their own mortality, if you have a family, it’s vital that you ask yourself questions about what would happen if you passed away:

  • Could your family remain in your home?
  • Would there be enough income remaining to pay mortgage, rent, utility bills etc.?
  • Would your children still be able to live the life you want for them?

Life insurance ensures that financial support is available when you’re no longer around. The lump sum they receive could allow your family to: continue living comfortably; reduce any burdens, such as outstanding debt or mortgages; provide savings to your children or grandchildren; or cover costs like a funeral.

Financial protection doesn’t just mean having life insurance

If you're too ill to work, you can get £99.35 a week (2022/23) in Statutory Sick Pay (SSP) from the government. If you were unable to work due to illness or injury, would this be enough to provide for your family?

Income protection could provide you with a regular income to substitute for your missing wages and boost any money you receive from the government.

Normally, there’s an "excess period” before payments will begin. The time you need to be unable to work before protection payments kick in varies so it’s important to check the small print before you decide on which policy is right for you.

Once you start receiving payments, you usually expect to receive regular payments until you are fit to return to paid work or reach retirement.

Income protection can be useful since it arrives in smaller, regular packages rather than a lump sum. This means you could be able to budget your expenses more accurately while also avoiding the pressure of managing a large, one-off payment.

Critical illness cover could help you focus on your health without worrying about money

If you become seriously ill, worrying about your financial wellbeing should be the last thing on your agenda.

With critical illness cover, you can be paid a tax-free lump sum in the event you’re unable to work as a result of the diagnosis or treatment of illnesses, including some cancers, stroke, heart attack, and multiple sclerosis among others.

Critical illness cover could help you to settle major payments or debts to allow you to focus on your recovery, rather than financial obligations.

As well as this, the coverage you receive could be put towards any new expenses that your illness may burden you with. These could be costs for things like equipment, such as a wheelchair or mobility scooter, or private treatment and therapy that can be expensive.

Becoming seriously ill without any type of protection could lead to negative effects on your personal finances. With protection from critical illness cover, you could secure crucial financial stability that allows you to recover from your illness without the stress of worrying about money.

Protect your loved ones with family income benefit

If you’re the breadwinner of your household, thinking about how your family could generate a suitable income if you passed away could be a concern.

Family income benefit can help provide your loved ones with a regular, passive income for a set period of time after you die. Some people may find consistent payments more convenient than a large one-off payment as it removes the pressure of having to deal with a large sum of money, which can be stressful to figure out in the aftermath of having lost a loved one.

We are here to help create a financial plan that covers you and your family

No one knows what the future holds. So, it's wise to plan ways of lessening the impact of the events we don't like thinking about.

We can help make sure that your financial plan provides a framework for your protection, savings, and investment objectives.

We could help to create a financial plan that covers you and your family

Once your financial plan is established, we can help you decide how much life insurance, income protection and critical illness insurance you should have to safeguard you and your dependants. We can also help you find affordable private healthcare that reduces the burden that ill health can bring.

The most common factors that can derail your finances in later years are often unexpected life events. By building allowances for these into your plans, you can better protect your future finances.

Get in touch

To find out more about how we can help you build a financial plan to protect your future, please get in touch. Email or call us on 01454 632 495.

Please note

The information contained in this article is based on the opinion of Aspira and does not constitute financial advice or a recommendation to any investment or retirement strategy. You should seek independent financial advice before embarking on any course of action. 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.

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on your mortgage or other debts secured on it.

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