Energy bills, food costs and mortgage rates have all risen sharply over the past 12 months and although wages have grown, they haven't kept pace with inflation. There’s little sign that these pressures will ease any time soon either, with the Bank of England forecasting that the current economic downturn could last well into 2024.
The primary focus for many over the past year therefore has been looking at ways we can trim our bills, by reducing expenditure on any ‘non-essentials’. Protection can be an especially tricky one for people to assess the true value of when times are tough financially, as it’s only when something goes wrong that it really comes into its own.
The sad reality is that protection isn’t just ‘nice-to-have’. It can and does provide a lifeline for thousands of people every year when something goes wrong, and their lives are thrown into disarray by a serious illness, or worse still an unexpected sudden loss.
If you’re weighing up whether protection is really necessary during these tough times, it’s worth stopping to think about who relies on you financially, and what would happen if you were unable to work and provide an income. If you don’t have a significant financial buffer in place, forgoing protection could mean your loved ones have no financial support if you’re no longer able to earn.
Claims figures published early this year show that the need for cover hasn’t diminished. A record £6.8bn was paid out in life insurance, income protection and critical illness claims in 2021, with 98% of claims settled by insurers. Aviva alone paid out more than £1bn in protection claims for the second consecutive year, equivalent to around £3m every day.
Keeping protection costs down
If you’re finding it hard to cover your protection premiums, there may be ways to reduce your costs, or at least make payments more affordable until things get easier. This year has seen big moves made by insurers to help customers who might be struggling, with some offering payment holidays, or a temporary reduction in cover and costs. If you have a plan and are finding it hard to make payments, seek professional advice as soon as possible on the options that may be available.
Even if your premiums are manageable, it’s still worth checking whether your existing protection policies still meet your needs, or whether you might be able to get more from your cover. Policies have become significantly more advanced in recent years, with many now offering ‘living benefits’ which can be used without claiming. For example, these may include access to GP and prescription services, mental health support, counselling services and physiotherapy, and are often available not just to the policyholder but to their whole family. Given that the NHS is currently under so much stress, these benefits can provide valuable peace of mind that you’ll have somewhere to turn for help without having to face an often-lengthy wait just to speak to someone.
If you’ve got any questions about protection, or you want to talk about an existing policy, our fee-free expert protection advisers are here to help you find ways to balance your needs with your budget. Remember, protection doesn’t have to be expensive, and some cover is always better than none. Our advice is completely free and without obligation so to talk to an expert adviser today, call us on 0800 073 1932.