The Importance of Financial Protection
Financial Protection with Eloise Hammond





The foundation of good financial planning is protecting you and your family against unforeseen events like death or serious illness. You may well feel comfortable with your current financial situation but you never know what could be around the corner.

Just think for a minute what impact a serious illness or death of a breadwinner would have on you and your family. How would you continue to pay the mortgage or rent, utility bills, school fees and for everyday costs like shopping or petrol?

A 2020 survey by Legal and General* revealed that if people were to lose their income and had to rely on their savings, the average household is just 24 days from the breadline. In some parts of the country, the average household would exhaust their savings in just 10 days.

Protection is one of those things that we tend to put off because we think we will never get sick or prematurely die, but reality can be very different. This is why, as a financial planner, I emphasise to my clients the importance of not just growing your wealth, but protecting it.

While we most probably wouldn’t think twice about insuring our home and possessions, insuring our future financial wellbeing is very rarely at the forefront of our minds. Financial protection is often only thought about in hindsight – something you wish you had put in place but at the point when it is too late.

No matter what stage you are in your life, it’s imperative to review your position and the protection you have in place. Careful financial planning can make a real difference to your life and those you care about, both today and in the future. It provides peace of mind that if anything were to happen to you, financially your loved ones are fully protected.

What is income protection?

Income protection is an insurance policy that pays out if you're unable to work because of injury or illness and meet the definition of incapacity i.e. you are no longer able to fulfil the requirements of your occupation.

Income protection usually pays out until retirement, death or your return to work, although short-term income protection policies, which last for one or two years, are available.

Remember that it’s not just the big expenses like mortgage, rent and utility bills that you need to think about – if you become ill and are unable to carry out certain everyday activities, you’ll need to organise alternatives, which could also cost money.

For example, paying someone to pick up the kids from school or take the dog for a walk or taxi fares, should you no longer be able to drive. These costs all mount up and while you might be lucky enough to get sick pay from an employer, statutory sick pay is not enough to cover the expenditures of most families.

What is life insurance?

Life insurance, also known as life cover, provides your loved ones with financial support if you die and usually pays out a lump sum or regular payments on death or, sometimes, on diagnosis of a terminal illness.

There are two main types of life insurance: Term insurance policies run for a fixed period of time, such as five, 10 or 25 years and only pay out if you die during the policy. Meanwhile Whole of Life insurance policies pay out no matter when you die, as long as you keep up with your premium payments.

Even if you already have life insurance and income protection in place, it’s always worth reviewing your policies regularly, to reflect any change in your circumstances. Cover can be adapted as your family’s lifestyle changes and, in most cases, if written in trust it won’t be liable for inheritance tax.

A financial adviser who specialises in protection can help ensure you’re getting the right insurances for you.

Contact Eloise Hammond on:

 01892 770 077
 eloise.hammond@sjpp.co.uk

Eloise Hammond | APFS
Chartered Financial Planner

* Legal & General Deadline to Breadline report - 2020

Trusts are not regulated by the Financial Conduct Authority.

SeventySeven Wealth Management Limited is an Appointed Representative of and represents only St. James's Place Wealth Management plc which is authorised and regulated by the Financial Conduct Authority.

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