3 unthinkable situations that could keep you up at night (and how to restore your peace of mind)

While starting a family of your own brings great joy, there will also be inevitable moments of worry. 

Yet as you watch your family flourish, you may occasionally feel a pang of concern about the unthinkable happening to those you love most.

Indeed, as you age, you could even have lost sleep over potential scenarios that would put your family’s well-being at risk. These are entirely normal worries to have, but they can be very distressing if you find yourself thinking about them often. 

There is no way to guarantee that an unexpected event will never affect your family. Fortunately, there are things you can do to provide a financial safety net if you’re hit by one of life’s toughest challenges.

If there are some unthinkable situations that keep you up at night, read on to find out three examples of these scenarios, and how to gain peace of mind through financial protection.

1. You pass away unexpectedly

It’s likely that, at some point, you have asked yourself: “What would happen to my family if I were to pass away unexpectedly?”

Sadly, the British Heart Foundation reports that there is an average of 100,000 hospital admissions for heart attacks each year – that’s one every five minutes. Of course, not all are fatal, but this is just one example of how we cannot always be warned of life’s tragedies.

So, it is absolutely crucial to have plans in place that could protect your family’s finances if you were to die unexpectedly.

Without a financial safety net, and facing the loss of your essential income, your family could struggle to: 

  • Continue paying essential bills, including mortgage repayments
  • Pay for a funeral at the last minute
  • Fund education costs for your children
  • Keep living the lifestyle they’ve become accustomed to.

Luckily, with the right protection in place, your family may not need to face this financial hardship if you pass away.

Life insurance is a foundational form of cover that can provide your family with a tax-free payout if you died. 

In its most recent report, published in May 2022, the Association of British Insurers (ABI) revealed that nearly 98% of UK life insurance claims were paid out in 2021, with the average life cover payout sitting at more than £80,000.

What’s more, the latest Aviva statistics show the insurer paid out on 99.4% of life cover claims in 2022. Two-thirds of rejected claims were due to misrepresentations by the policyholder.

So, it’s clear to see that if you hold an up-to-date life cover policy with the correct information provided, there is an overwhelming likelihood that your family could make a successful claim upon your death. 

Protecting your family’s wealth in this way could prevent them from experiencing serious financial stress if you passed away unexpectedly.

2. You or your spouse become seriously ill

Another scenario that may keep you up at night is wondering how your family would be affected by a serious illness, such as cancer or a stroke.

Unfortunately, cases of both these illnesses are prevalent. According to the NHS, 1 in 2 people will develop cancer in their lifetime. What’s more, the Stroke Association reports there are 1.3 million stroke survivors in the UK, many of who may never return to full-time employment.

If you experience any serious illness, not just the two mentioned above, you could face various financial strains as a result. These might include:

  • Needing to take a long time off work 
  • Your spouse also requiring time away from employment to help care for you
  • Increased childcare due to your lack of physical capacity.

While the government can provide financial support in many of these areas, this depends on your circumstances and is not guaranteed to cover everything you need. Similarly, your employer’s sickness policy may be outlasted by your illness, meaning your income could fall short after just a few weeks.

Fortunately, critical illness cover can be incredibly powerful for your family if you were to stop working due to a serious ailment.

If you need to make a claim, your family could receive a tax-free lump sum that can help them cover the costs mentioned above. 

The ABI report shows the average critical illness payout in 2021 was £67,951 – a significant sum that could make all the difference to your family in a difficult time.

What’s more, many providers include your children in your plan – meaning if your child were to become critically unwell, you could potentially afford to modify your life around their care.

3. You lose your income due to long-term sickness, injury, or disability

As you have read in this blog, a long-term removal of income as a result of unexpected circumstances could be detrimental to your family’s long-term financial stability.

Ask yourself: “Could my family still afford their lifestyle if they lost my income on a long-term basis?”

If you became injured or ill, and if this led to a permanent or long-term disability, missing out on your regular income could mean you are forced to deplete your hard-earned savings very quickly. These circumstances could put your family in a precarious situation, especially if your employer does not provide long-term sick pay, or you are self-employed.

When faced with a scenario like this one, income protection insurance could provide the peace of mind you seek.

Upon losing your income due to injury, illness, or disability, your income protection cover could pay you a tax-efficient monthly “wage” that helps to subsidise your earnings. Payments often make up around two-thirds of your salary, but this may vary between providers. 

What’s more, you usually receive these monthly payments until you return to paid work, the policy ends, you retire, or when you pass away – whichever of these comes soonest. 

You might think you’re “too young” to think about long-term illness or disability – but according to Aviva, the average age of an income protection claimant in 2022 was 41 for women and 43 for men. The insurer paid out more than £50 million to policyholders last year alone.

Ultimately, being able to rely on these payments for a fixed period of time could be transformative if the unthinkable happens. With this safety net in place, your family can focus on what’s important: supporting each other.

Get in touch

Working with a financial planner who understands your family’s values can help you protect what matters most.

To discuss putting together a package of protection, or any other financial matter, email me at a.douglass@grosvenorconsultancy.co.uk or call my office on 01793 766 123. Alternatively, call my mobile on 07525 177 046. 

While I offer high standards of service and will work with you to ensure any plan is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

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

Note that financial protection 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. Cover is subject to terms and conditions and may have exclusions.

Leave a Reply

Your email address will not be published. Required fields are marked *