Chances are, Life Insurance, Critical Illness Cover and Income Protection are all terms that you’ve heard of, but they may not be something you have considered looking into, and there can be a multitude of reasons for this. There are, however, a handful (or more) of reasons that should trigger you to look into this more seriously. The life event I will be focusing on today, is the need for protection alongside a mortgage. When taking out a mortgage, one is indebting themselves, often quite heavily, and is opening themselves up to potential serious financial ramifications. Unlike buildings insurance however, life insurance is not an obligation to the client, and therefore, unfortunately, a lot of clients are not compelled to explore this further.
A great majority of the clients I interact with are young first time buyers, or second time buyers, and a lot of them have what I call, the ‘invincibility complex’. What I mean by this, is that they are in the shape of their lives, on a great career path, and in their minds, nothing can touch them. This couldn’t be further from the truth. Research from Cancer Research UK dictates that 1 in 2 of us, born after 1960, will get cancer . There are a staggering 360,000 new cases of cancer every year , that is an average of around 990 new cases every day! We are innately prone to act in ways that will make us feel good in the short term. Some of us avoid the long term thinking and deferred gratification that our future selves will thank us for. Thankfully, as we mature, however, most of us learn to curb our short-term impulses for longer term planning. A lot of my clients believe that their parents will cover the financial burden left by the curveball life may throw our way. This thinking couldn’t be more flawed, as most parents, although financially stable, will naturally kick the bucket before we do.
It is rare, but I have experienced clients adopt a very dismissive attitude towards protection, whether Life, Critical Illness Cover (CIC) or income protection, despite them having children. If you have dependents I cannot stress how crucial it is that you look after them, especially if you are taking out a mortgage. Life insurance is one of the cheapest ways of ensuring that should the worst happen, we are able to leave behind a home for the children to live in. If you have financial dependents, it is never too early to think about how they will be taken care of. The younger you are when you take out life cover, in turn, the cheaper it is. This is because the older you become, the more at risk you are of certain health conditions. You do not buy life insurance because you are going to die, you buy life insurance because those you love are going to live.
If you are single, and have no children, the thought process here may divert to one of indifference towards protection. Whether you have the invincibility complex outlined above, or that you feel you are sufficiently covered through work, there is still room to have a serious conversation about your need for protection. Yes, Life insurance is most likely not relevant. Should you die, your parents could sell the property, pocket the profits, and financially, there has been no harm done. What is more interesting for someone in your position is undoubtedly the need to protect yourself and your income. You have probably looked into protecting your mobile phone, protecting your flights that you book through travel insurance, you are even legally obliged to insure your car, yet you feel as though yourself, without a doubt your biggest asset, does not need to be protected? It is time that protection stops being a taboo topic. Gone are the days where insurance was a conversation that only your parents held, or a concern for the elderly population. Protect your income, to ensure that should you be out of work, your finances are taken care of. Protect your health, through CIC, to ensure that should you be diagnosed with 1 of a plethora of medical conditions, the plan will pay out a lump sum which can be used for whatever you wish.
This is by no means an exhaustive list, but it gives an insight into common objections, and where the need for adequate protection may be relevant to you. The only person who can take care of the older person you will someday become, is the younger person you are now. One quote which always stuck with me was by Frank McKinney, an American cartoonist, humorist, and journalist “Fun is like life insurance; the older you get, the more it costs.”