This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice please consult us here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
How much insurance do you need to protect your wealth and household finances? After all, the list of policy types can get quite long with insurance for cars, pets, homes, travel, health, life and income. In reality, most people cannot afford full cover for all insurance types and so need to focus their budget on what is most important. Below, our Burnley financial planners offer a 2023 insurance checklist that most UK households should be able to use to review their protection profile. We hope this is useful to you and please contact us if you want to discuss your financial plan with an experienced financial planner in Padiham.
Protecting your home
In the UK, you are normally legally required to take out buildings insurance if you want to buy a home with a mortgage. This helps cover the cost of rebuilding your home if it is damaged or destroyed by a fire or other accident. Buildings insurance is different from contents insurance. The latter is not legally required but it can cover the value of the items in your home (i.e. those which you could take with you if you moved house).
Ask yourself, could you afford to replace your belongings if there was a break-in, fire or flood? To control premium costs, some people might focus on just insuring the value of “higher value” items such as furniture, but not sentimental items. If you are a buy to let landlord, then it might be worth covering yourself for expensive items like beds, sofas and kitchen appliances.
Life insurance
If you have loved ones who rely on you (e.g. young children) then life insurance is important to take a look at. Should you die prematurely, this policy will provide a much-needed lump sum to help support their living costs – potentially also letting them pay off the outstanding mortgage. There are different options depending on your needs. For instance, parents might consider a “fixed-term” policy which offers cover until the youngest child turns 18. Some policies will raise the premiums and offered payout value in line with inflation, whilst others (e.g. “level term life” policies) keep these the same. Speak with a financial adviser if you are unsure about whether you need life insurance and which type is best for your needs. For instance, you may not need as much cover from your own policy if your employer offers “death in service” benefits.
Insurance for injury and illness
What would happen to your finances if you suddenly became seriously ill or injured – perhaps in a traffic accident – and could no longer work for a long period? Relying on Statutory Sick Pay is unlikely to cover your outgoings, currently standing at £99.35 per week in 2022-23. Short-term savings will only keep you afloat for a limited time – also leaving you in a vulnerable position if they get depleted. Here, policies such as income protection and critical illness cover can offer a strong level of protection. The former supplies a replacement income if you can no longer work due to illness/injury (e.g. two-thirds of your salary); the latter offers a lump sum payment if you get diagnosed with a specific condition, such as a heart attack. You can tailor your cover based on how many conditions you want to cover and how long you want the cover to last. You might only need income protection or critical illness cover – not necessarily both. A financial adviser can help you ascertain which approach can best protect your finances.
Discretionary insurance types
If you go on holiday – especially if venturing abroad – it is wise to consider travel insurance. If your flight is delayed or your baggage is lost, this can provide a lot of peace of mind. Take care to think about the cover you might need if you became seriously ill or injured whilst abroad. In many countries, getting good healthcare can be expensive, especially if you need to turn to private treatment.
Those with pets will doubtlessly be familiar with the costs that come with having a “furry friend”. Vet bills, in particular, can get eye-wateringly high, especially if you have an injury-prone pet like a Chocolate Labrador, Staffordshire Bull Terrier or a Rottweiler. Consider different insurance options carefully. For instance, some policies increase the excess amount as your pet gets older and some operate on a “co-insurance excess” model which can get very expensive.
A final insurance type to insurance is private medical insurance. Whilst UK residents still have the NHS, free at the point of use, having the option to go private can help you access faster, more specialist treatment. You could have access to a private room when going for treatment, as well as more choice over your doctor and hospital. Check whether this is a benefit that your employer offers (or could offer, perhaps in a future pay-rise negotiation).
Invitation
If you are interested in starting a conversation about your own financial plan or investments, then we’d love to hear from you. Please contact us to arrange a free, no-commitment consultation with a member of our team here at Elmfield Financial Planning in Padiham, Burnley, Lancashire.
Reach us via:
T: 01282 772938
E: info@elmfieldfp.co.uk
