With so much uncertainty it pays to think about financial protection planning. What would happen if you lost your job or income – how would you and your family cope? There are many different types of protection available and it can be difficult to know which is essential, and which is nice to have, particularly at a time when people are feeling the pinch and cutting back on unnecessary expenditure.

Below, we run through some of the main protections available and which ones you need to consider to protect you and your family.

Question: I am on a tight budget – do I need life cover?
Answer: For most people with dependents, this is the very least cover you should have in place, paying out a lump sum if you die during the policy term. As with our case study below, people tend to take this out at the same time as arranging a mortgage, ensuring the home loan is paid off should anything happen to those paying the mortgage. The good news is that it is a relatively inexpensive monthly premium, but it is worth comparing cover (using a broker) to get the best deal.

Question: what happens if I lose my job – how will I pay my mortgage?
Answer: State help is limited and doesn’t apply for some weeks if you are prevented from working for a period of time, so this is where income protection can be invaluable. It provides regular payments if you are made redundant, have an accident or fall ill, so you don’t have to worry about the bills. Policies pay out a set percentage of income for a period of time, last for 12 months, or will cover you up to retirement.

Question: When should I consider critical illness cover?
Answer: This long-term insurance cover pays out a tax-free lump sum if you are diagnosed with a specified serious illness, such as major cancers, or suffer a stroke or kidney failure. It is designed to pay off your mortgage and/or cover other outgoings and is often arranged as a bolt-on to life cover. It tends to cost more than life insurance or income protection with premiums calculated according to a number of factors, including age, health, level of cover, your job and whether you are a smoker. But if you are in a position where you need to make a claim, you will be glad to have it.

Question: As a small business owner, what protection can I offer my employees?
Answer: Relevant life cover, which provides death-in-service benefits, gives financial protection to your employees’ families in the event of their death while employed by your company. You pay the premiums, which are usually treated as tax-deductible, with beneficiaries typically receiving a tax-free lump sum of three to five times annual salary. It’s an attractive recruitment tool for new members of staff and can be uniquely tailored to the specific requirements of your small business.

Question: When are family income plans worth considering?
Answer: Protecting your family is important, particularly if you are the main breadwinner and they rely on you financially. For a fairly modest monthly premium, a family income plan pays out a monthly sum to cover your family’s living costs, including the mortgage, if you were to die during the policy term.

Question: Can I afford private healthcare for my family?
Answer: NHS waiting lists can be long and it can be a challenge to get an early diagnosis. More people are turning to private healthcare to cut waiting times, speed up diagnosis and access better facilities, including treatment via specific hospitals or specialists.

Private health insurance makes private healthcare more affordable, with a monthly premium depending on your age, health and level of cover. Private health insurance can be expensive, particularly if you are covering your family as well as yourself, and choosing the right plan can be a minefield, which is why it is essential to seek advice from a broker who can look at what is available and help tailor a policy to suit you and your family’s circumstances.

Question: Where can I find out more?
Answer: AWS Private Finance can advise as to the best protection for you, your family or your employees. We understand what each policy offers and can select the right cover for you and your dependents, at a competitive price. Get in touch for more information.