It is therefore a good idea for everyone to plan for the unexpected and build some cash reserves in case of a financial shock.
Sometimes our budgets can be tight, and you might feel that you can’t afford to put any money aside. But consider what you would do if your income suddenly disappeared and you didn’t have any savings? Would you have to put your expenses on a credit card, or take out a loan? Would you be able to borrow from a family member in an emergency?
If you did then you would have to find a way of repaying the debt. If you were able to repay the debt then perhaps you could save in the first place.
When we consider a person’s financial well-being, one of the factors is the ability to cope with a financial shock. So ask yourself, could you afford your monthly bills? Could you pay the mortgage? What would it be worth to know that in the event of an unforeseen event you would be okay?
We have protection in place in case our car is stolen, we have a car accident, or if something goes wrong with the house, but covering ourselves is often not high on the agenda. Perhaps this is because car insurance is compulsory, and so like it or not you have to have it. Perhaps we just don’t like to think about what might happen to us, or we don’t want to pay an insurance premium for an event that we would rather not think about.
But isn’t that the point? We do need to think about these things and at least acknowledge the risk. Our mindset should not be that we don’t want to think about it, but rather that we have planned for it and then have the peace of mind that if something does happen to us, we will be okay.
There are some preconceptions that may play a part.
You might think that you have sufficient cover through your employment death in service benefit. But what happens if you change job in the future? The cover would stop and your new firm might not have it. At this point, you might find it harder or more expensive to obtain private cover.
People often think that if you do take out insurance then it will not pay out anyway. The reality is that payout rates for critical illness claims are high. In 2018 the Association of British Insurers reported that 97.6% of claims were paid out. You can help this by being open and honest when taking out the policy and at the point of claim and not giving the insurer any reason to deny a claim.
Maybe you think you cannot get cover because of a previous illness or because you are too old. Everybody’s situation is different and so are their insurance needs. Cover may be more expensive but if there is still a need for it then this is a choice you have to make. But at least find out so that you can make the choice to cover yourself or not.
So, don’t leave things to chance and come and see one of our financial advisors. Think positive, think about your well-being and ensure you can cope with any unwanted financial shock. Plan for the worst and feel better about the future.
