With the Covid-19 crisis showing little sign of improving, Adviser Points of View asks Gary Smith, chartered financial planner (CFP) at Tilney, why life assurance and business protection have never been more important.
Why is it necessary to take out life insurance and business protection now?
The prime concern at this time must be the safety and wellbeing of those around us. Unfortunately, we have been shown that we are not invincible and some of us will be affected. On top of the obvious grief we feel when losing a loved one, the financial burden for you and your family in the event of death, critical illness or long–term sickness can be significant. Would your family be able to cope without your or your partner’s salary?
Having financial protection, such as life assurance and critical illness cover, in place will help ease your mind during an already incredibly stressful time. For example, a life assurance policy will ensure your family is provided for on the event of your death. Similarly, critical illness cover would help to ease the financial burden in the event of a severe illness or injury. While you always hope that you would not need to use these policies, they are there to insure against things like the family home being lost and ensure your loved ones are provided for, when you cannot provide for them yourself.
Protecting your income and the financial well-being of our families is obviously of the utmost importance, however it is equally important to protect our businesses. They represent our livelihood; the ability to provide for our families now and in the future. It is imperative that business owners have business protection in place currently. This will help ensure the real value of your company passes to your intended beneficiaries and can ensure the continuity of your business if you or your business partner/s are no longer around.
A good financial plan should always include discussions and plans to put in place life cover and income protection, so the requirement to put such cover in place has not changed.
What has changed, is that previously many people did not always follow advice to put in place cover, as the natural feeling is that “it won’t happen to me” and that the cover is not required. However, the current crisis has shown how everyone can be affected and has focused attention on the requirement to protect loved ones, and business interests, in worst case scenarios.
Is it difficult to get personal and business cover during a global pandemic – perhaps too little too late?
It is still possible to apply for life cover, critical illness cover and income protection but, as insurance companies don’t want to add any extra burden to the NHS, where any form of medical underwriting is required, an underwriting decision will be deferred until there is capacity within the NHS to recommence underwriting. Where the application is ‘clean’, in that there are no medical or BMI issues, and the level of cover is below routine underwriting requirements, these applications are still proceeding. Whilst it is likely that some medical underwriting will be required, someone could apply for cover, below routine underwriting limits, and then apply for increased cover once medical underwriting recommences.