Protecting Your Family

Practical Advice By Rosie Little and Callan Anderson

Think about it – what’s more important to you, your car or your kids?
The answer should be obvious, even if you’re forced to make a choice between a Ferrari and a five-year-old. However reluctantly, the children are going to come first. When it comes to protecting them, however, too many of us actually pay more to cover the cost of the car than our own lives.

In my line of work I often find when I perform a budget review that people pay more to insure their possessions than to insure their families. Does this mean they place more value on their cars than their family’s wellbeing?  Of course not – but it’s human nature to avoid the thought that something could happen to us

We all want the best for our kids – we try to give them a good life with a comfortable home, happy holidays, celebrations for their birthdays and smile-inducing presents at Christmas. In order to achieve all this, we work and we juggle childcare. A good lifestyle costs money and if for whatever reason, one breadwinner was to stop earning, then family life would undoubtedly be compromised. A death or serious illness, and that compromise could be permanent. But it’s important to make sure that if the unthinkable happened to your family, the consequences are not devastating.

Typically we first consider life insurance when we take out a mortgage.  You may think that you have protected your family because you have made sure that your mortgage will be paid off in the event of premature death or critical illness but in today’s world this is rarely enough.

 Consider the cost of other ongoing household expenditure, including council tax, loans, utilities, as well as specific costs to do with your children. According to the Office for National Statistics, the average household spending is £456 per week! You have to ask yourself how your family would cope if mum or dad’s income stopped.  

You may have to fall back on state benefits, sell the family home, move to a cheaper area and be forced to change schools. In short, the good life that you have worked so hard for, for the sake of your family, could be gone. In its place, you’re looking at a situation where you’ll struggle to make ends meet.

Family protection is insurance to help your family cope with the financial consequences of a mum or a dad dying prematurely or suffering a life changing illness. There are various products, which are available to help, some of which you might never have heard of.  

•    Life Insurance – gives your family money if you die.
•    Family Income Benefit – gives your family a continuing income if you die.
•    Income Protection – pays you a monthly income if you develop an illness that may not be “critical” but is severe enough to stop you from going to work.
•    Critical Illness Cover – pays you a lump sum or an income if you are diagnosed with one of a list of defined illnesses, for example cancer.

Positive Steps to Protecting your Family

DO… Take stock.
Assess your current income and expenditure.  Itemise your outgoings. Work out how much your family would need to cover not just  the necessities each month but to continue the lifestyle you would want.

DO… Identify Contingencies.
Pull out the paperwork relating to any cover you already have and quantify this. Confirm with your employer what your entitlement to sick pay is and what your death in service benefits are. If you think you would rely on state benefits then have a look at www.dwp.gov.uk and assess whether you could do this.

DO…. Find an Independent Financial Adviser.
An independent financial adviser will find the best value option for you by researching the market, consulting with you about your concerns, helping you to identify protection shortfalls and prioritising them. Find someone you trust. If you need help then try www.unbiased.co.uk or call the number below.

DON’T… Assume that Family Protection is Expensive
An independent financial adviser can work out the most efficient way to protect your circumstances and ensure the lowest possible cost.  As little as £10 a month could provide your family with a yearly income of £10,548 if you died.

25% of men have life insurance and only 17% of women.
55% of families have some life insurance, but 32% of those don’t know how much cover they have

Raising a family has never been so expensive.
It costs £8,578 a year to raise a child to age 21 – that’s £180,137 in total.
The typical cost of a full-time nursery place for a child under two is £146 per week in Scotland.
In 61% of UK families, both parents have to work to cover the cost of raising a child.

As busy parents themselves Callan Anderson & Rosie Little understand the pressures of family life, both from a practical & financial perspective.  

Callan Anderson is an independent financial adviser and has been advising a growing bank of satisfied clients for 11 years.
Contact Callan at canderson@equilibrium-fc.co.uk
 
Rosie Little is a mortgage & protection adviser with a broad range of financial services experience gained over 20 years.
Contact Rosie at rosielittle@equilibrium-fc.co.uk

Equilibrium Financial Consultancy Ltd is a firm of independent financial advisers who genuinely strive to provide clients with a quality service. Call free on 0800 567 7599 during the day or evening.