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Plan for the worst, hope for the best: get insurance!

Do you have insurance in place to cover you and your family in case you become ill, or die? You should.

Plan for the worst, hope for the best: get insurance!

In the hubbub of the end of the tax year and talks of ISAs and allowances, you’d be forgiven for missing the cuts the government has made to bereavement benefits.

It’s not a pleasant thing talking about death but it comes to us all, and now if you have children, the amount of bereavement benefits you’ll receive from the government has been drastically reduced.

From the 6 April, bereaved parents will only receive bereavement benefit – which is paid at a maximum of £112.55 a week, depending on the deceased spouse’s national insurance contributions – for 18 months. Previously, the benefit was paid until children reached the age of 16.

It’s a huge reduction and the government has said it would help parents ‘readjust’ to life as a single parent.

If you don’t have children then you can only claim bereavement allowance under very specific criteria. If you are under 45 you most likely won’t qualify.

If other people rely on your income – maybe you have children or you share a mortgage with someone – then you should be looking at insurance.

Insurance isn’t sexy and you hope to never use it, but it’s far from a waste of money as it can protect you, your income, your home and your family.

There are lots of different types of insurance to choose from and they all do different jobs so you need to decide what cover is most suitable for you. Before buying insurance, however, check with your employer if they offer any cover. You may already have some type of insurance through your workplace or be offered a discounted rate on insurance via your job.

There are three main types of insurance you should look at:

Life insurance

This pays out a lump sum or regular payment when you die. It may be worth it if you have a partner or children who depend on your income to cover mortgage payments or living expenses. Me and my husband have a life insurance policy that pays off our mortgage if one of us dies so the survivor can continue to live in the house without worrying about having to cover the whole mortgage.

Critical illness

This policy pays out a lump sum, or sometimes a regular income, if you become critically ill. Critically ill is defined differently in every policy but generally covers things like heart attacks or certain specified types of cancer.

Whether its worth it or not depends on whether someone relies on your income and whether your illness would mean you could not work. I have a critical illness policy that pays out enough to clear the mortgage in the case I become too ill to work. I figured that I wouldn’t want to worry about losing my home on top of dealing with an illness.

Income protection

If you can’t work for a while because of illness or disability then an income protection policy will pay a percentage of your take-home pay. It means you can cover your bills and living expenses without resorting to building up credit card and overdraft debt if you are unwell. Although I don’t have this insurance, I probably should as it’s pretty much made for people who are self-employed and don’t have any type of workplace insurance to fall back on.

It’s amazing that we don’t think more about how we would pay our bills if we couldn’t work - we all just assume that we will be able to work without any problems. And of course, we all hope that we remain healthy and there won’t be any need to use the insurance, but just because you hope not to use the insurance or have an it-won’t-happen-to-me attitude, you should look into it anyway.

Insurance is all about planning for the worst and hoping for the best – and if the worst does happen, you won’t be plunged into debt.

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IFS says taxes need to hit historic highs to save NHS

by Dylan Lobo on May 24, 2018 at 07:56

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