Do You Have a Financial Safety Net?

Life happens. It has its ups and realistically it also has its downs. Hopefully, overall, there will be more ups than downs. It is, however, wise to be prepared for the more challenging periods. “Am I protecting my family enough?” is a question to keep in mind at all times. Here are four points to look at to keep your family financial secure. Cash Savings This may seem like stating the obvious, but having a cash cushion can help protect you and your family from financial blows. They are particularly useful for what could be called short-term shocks. These may not be covered in other ways, or you may not want to claim on other cover. For example if you are a freelancer and a regular contract is ended, cash savings can tide you over until you replace it. How much you need in the way of savings will depend on your personal situation. Income Protection https://www.moneyadviceservice.org.uk/en/articles/do-you-need-income-protection-insurance No one wants to think about getting ill but it can and does happen. How would your family cope if the main breadwinner were suddenly unable to work? In the short term, cash savings might tide you over. If you are close to retirement and have a pension due, they might be all you need. If, however, you have a longer horizon, then looking at some form of income protection may be advisable. The most obvious candidates for this product are the self employed. Even the employed, however, might want to think about it. Income protection can be taken out to cover you for sickness and injury and provides you with an income until you are back on your feet. Critical Illness Cover https://www.moneyadviceservice.org.uk/en/articles/critical-illness-insurance-do-you-need-it Critical illness cover pays a lump sum if you are diagnosed with one of a specified range of medical conditions. It can be used in combination with medical insurance and income protection to help protect against illness devastating your finances. Income protection cover will take care of replacing your usual income. Medical insurance will take care of getting you the best possible treatment in the shortest possible time-frame. Critical illness cover can help smooth over the extra expenses which can be caused by illness. For example, it could help towards paying off your mortgage, covering additional medical expenses or reducing the financial impact if you were unable to return to work, or anything else you needed. Life Insurance Cover https://www.moneyadviceservice.org.uk/en/articles/do-you-need-life-insurance http://www.legalandgeneral.com/life-cover/existing-customers/online-trusts-tool/ You are irreplaceable but in the event of your death being able to replace your income can give your family peace of mind. Even if you are a home-maker, you still make a financial contribution to the household. In simple terms, someone would have to do what you do in the event of your death. Family and friends will often do what they can to help, but this can be an extra burden on them. It is one they may struggle to manage over the long term. Even when you have a substantial estate, there is another advantage to life insurance. In simple terms it can be written in a way which leaves it ring-fenced from the rest of your assets. This means that it can be released promptly rather than having to go through the (potentially lengthy) process of probate.