As we approach the end of our fifth week of enforced social distancing, the impact on how we live life and – crucially – how we manage our personal finances has been radically altered.
The government’s fiscal response to the current crisis has been focused predominantly on protecting the incomes and revenues of businesses and, consequently, individuals. The clear message has been that this situation and the economic fallout it is causing might continue for some time.
But although it might be instinctive for us to close the purse strings tighter, there are some things that are worth investing in now – not just because they might prove invaluable during this period of uncertainty, but also because they will provide peace of mind in the years to come.
If Covid-19 has taught us nothing else, it has proved that life is never certain and that circumstances, especially those relating to financial security, can change fast.
You may already have some level of protection in place, but reviewing your current arrangements and making sure you and those you’re close to are properly protected financially is a smart move even at this strange time when we are consciously or unconsciously spending less.
The government has already promised to provide financial relief to employees who are unable to work as a result of the coronavirus. You may be one of those affected, and I’m sure the guarantee of receiving 80% of salary is a big comfort for those who are.
But the reality of this situation is forcing everyone to think about how they would meet their financial commitments if they found themselves suddenly unable to work.
Although this extraordinary period will come to an end eventually, the risk of losing income will always be present. It comes in the shape of poor and debilitating health or, worse, death.
So how robust are your own measures for protecting your finances and your family? Let’s take a look at the key products you should be considering now to protect yourself tomorrow and beyond.
It’s likely you already have a life assurance policy to cover your mortgage in of your death or that of a joint mortgagee. But are you confident it’s fit for purpose?
Depending on the type of policy you have, it may be it no longer provides you with the security it once did. That could be because as you’ve progressed through life your commitments have changed and grown but you haven’t modified your insurance to match them.
If you have a whole life policy, it will pay out a fixed lump sum whenever you die. Is that enough to repay your remaining mortgage debt and provide ongoing security for your loved ones?
If you have a term policy, the sum paid on death is either the same regardless of when you die (level term), decreases over the life of the policy (decreasing term) or increases over time (increasing term).
You need to be sure the sums that will be paid are sufficient to meet the needs of those left behind – especially if you have a decreasing term policy.
Critical illness cover
Also known as cancer cover, since cancer is the condition that triggers most payouts, this policy will pay a lump sum on diagnosis of a terminal illness. The payment can be used for any purpose, whether it’s to pay down mortgage debt, fund private treatment or meet ongoing living costs.
Income protection offers a regular payment to replace the majority of your salary should you become unable to work either over an extended period, or permanently due to an injury or chronic illness.
Although the payment is a proportion of your regular income, the fact they’re tax free means they will be close to your take home pay amount.
We have seen over the last two months how quickly and suddenly things change. Protecting your personal finances now is just one way that you can mitigate the impact of your circumstances changing significantly in the future.
If you’d like to find out more about these products or learn how Oportfolio can tailor personal protection to your specific needs and circumstances, why not get in touch with a member of our friendly team today?
Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority
Your property may be repossessed if you do not keep up repayments on your mortgage.
Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.