The Importance of having a Financial Plan B

Plan B is the safety net for when life throws unexpected challenges our way — the loss of a loved one, a debilitating illness, or a sudden accident. While we may feel financially resilient in the comfort of our Plan A, the truth is that a significant proportion of Britons lack the necessary protection to weather life's storms.

According to research published last year by the Financial Conduct Authority₁, less than half of UK workers have some form of protection insurance. This statistic is alarming considering the affordable nature of such insurance and its vital importance. Despite this, many individuals overestimate their financial resilience, with a quarter of UK adults having less than £1000 set aside for emergencies, and one in ten having no savings at all.

But why are so many people hesitant to embrace protection insurance? There are several common misconceptions that contribute to this reluctance:

Misconception 1: Protection products are expensive.

Contrary to popular belief, protection insurance can be surprisingly affordable. For instance, a non-smoking 30-year-old might pay as little as £7.30 a month for £200,000 of life cover over a 25-year term₁. With the right guidance from an Independent Financial Planner, it's possible to find suitable coverage while keeping premiums manageable.

Misconception 2: I'm already covered through work.

While some employers offer benefits like sick pay and death benefits, these may not provide sufficient protection for your family's needs. Additionally, if you're self-employed, you are your own employer, highlighting the importance of securing independent coverage.

Misconception 3: Life insurance is all I need.

While life insurance is crucial, protecting your income is equally—if not more—important, especially considering the likelihood of experiencing serious illness or long-term sickness during your working years.

Misconception 4: Protection policies never pay out.

There is a lot of scepticism surrounding insurers, but contrary to common belief, the vast majority of protection claims result in payouts. In 2022, 98% of protection claims were successful according to the Association of British Insurers, providing policyholders with much-needed financial support during challenging times.

Misconception 5: I'll never get anything back.

Insurance is designed to provide peace of mind and protection when needed most. Even if you never make a claim, modern protection products often include added value benefits from day one, such as 24/7 GP services and counselling support, enhancing your overall well-being.

 

Given the prevalence of these myths and the sobering reality of most UK worker’s financial vulnerability, it might be time to consider implementing a robust Plan B. Protection policies come in various forms, each tailored to specific needs and circumstances. While navigating the intricacies of insurance may seem daunting, seeking expert financial guidance can help you create a comprehensive plan that safeguards your future.

While life may be unpredictable, having a Plan B in place can provide the security and peace of mind needed to navigate whatever challenges come your way. Speak with one of our friendly Independent Financial Planners to understand the options available to you.

Here to help

Our Team of friendly and experienced Independent Financial Planners has full access to the protection market and can create personalised and tailored and tax-efficient protection recommendations for you.

Book your free initial consultation today:

• Call Financial Planning by TaxAssist on 0330 441 2244
• Complete the enquiry form
• Email: [email protected]

 

₁ Financial Conduct Authority ‘Financial Lives’ survey, January 2023

₂ Source Iress, for standard rates, male 30 n/s £200,000 level cover  over 25 years, guaranteed premiums, March 2024