Most of us insure the things we own. Our homes. Our cars. Our phones. The family dog probably has better insurance than some people, but when it comes to protecting the thing that pays for all of those things, our income, many of us have little or no cover in place.
It’s understandable. Nobody likes thinking about illness, injury or being unable to work and life gets busy, protection often slips down the list behind mortgages, pensions and everyday expenses.
The problem is that life’s unexpected events don’t tend to wait until it’s convenient.
Research from MetLife found that more than half of UK adults have no protection insurance at all, yet many households would struggle financially if their income stopped for even a short period of time.
For many families, the monthly salary coming into the bank account keeps everything moving, the income gets split into different pots and the mortgage gets paid, the food shop gets done, the children’s activities are covered, pension contributions continue and holidays get booked. But what if illness or an accident meant that income suddenly reduced or stopped altogether?
According to the research, more than a quarter of people aren’t confident they could cover their normal living costs without borrowing money if the main earner was unable to work for just six weeks.
That’s not because people are reckless with money. It’s simply the reality of modern life. Household budgets are often stretched, and even those with savings can see them disappear surprisingly quickly when they’re being used to cover everyday spending especially as our bills are increasing along with the food prices.
“It’s won’t happen to me” is a phrase many of us have probably thought at some point. The trouble is that most periods off work aren’t caused by dramatic, headline-grabbing events. They’re often the result of everyday illnesses and accidents. A bad fall. A sports injury. A stay in hospital. An illness that takes longer to recover from than expected.
Research found that 42% of adults have experienced an injury serious enough to require a hospital stay of at least 24 hours. Most people don’t plan for these situations because they don’t expect them to happen. Unfortunately, that’s exactly why they can cause so much financial stress when they do.
One of the biggest misconceptions about protection is that it’s all doom and gloom but in reality, it’s about giving yourself options. If you’re unable to work for a period of time, would you rather be worrying about how to cover the mortgage and household bills, or focusing on getting better?
That’s where protection can help.
Whether it’s income protection, critical illness cover or life insurance, the aim is the same: to provide a financial safety net if life doesn’t go to plan. It’s not about preparing for the worst-case scenario. It’s about making sure one unexpected bump in the road doesn’t undo years of careful financial planning. The most important question to ask yourself is a simple one: if your income stopped tomorrow, how long could your household comfortably cope?
For some people, the answer might be six months, for others, it may be six weeks, for many, it could be much less. Understanding the answer doesn’t mean you need to rush out and buy every protection policy available. It simply helps identify whether there may be a gap in your financial plan that needs addressing.
After all, building wealth is important, but protecting it is just as important.
At Blackdown Financial, we believe good financial planning isn’t just about helping you achieve your goals. It’s about helping you stay on track when life inevitably throws the occasional curveball. If you’d like to hear more about our protection options, get in touch.
Sources: MetLife Everyday Risk Report and MetLife “Start with the Protection Gap” research.
This article represents the opinion of W&T Ltd trading as Blackdown financial only and is intended as information only. The content of this article should not be construed as advice or recommendation.