5 practical steps to help protect your family’s financial future in 2026 

Going into 2026, you may be considering your financial goals and priorities for the year ahead.

In particular, you might be looking to shield your family’s finances against the unexpected by building financial resilience.

Whether it’s illness, injury, or unexpected expenses, having provisions in place can help protect you and your loved ones. Such measures can often sit on a to-do list for a long time; while understandable, delaying them may expose you and your loved ones to unnecessary risk.

Here are five practical steps you can take to help protect your family’s financial future and enjoy peace of mind that you’re prepared to weather life’s storms.

 

1. Review your life insurance needs

None of us likes to think about the prospect of passing away. But ignoring the elephant in the room could expose your loved ones to financial risks. In fact, UK Life Insurance found that 14% of survey respondents were unsure how their families would afford their homes after they passed away.

Many people choose to protect their family’s financial future by arranging life insurance.

Typically, life insurance pays out a lump sum to your beneficiaries when you die. You can choose to be covered for a fixed term or for the rest of your life.

• Fixed term: These plans typically have lower premiums but will only pay out if you die within a defined term. They are commonly used to cover expenses over a specific period, such as the duration of a mortgage or the policyholder’s working life.
• Whole of life: Also referred to as “life assurance”, these plans usually provide cover for your lifetime if you keep up with premium payments. They can be useful for providing funds to pay for your funeral or for leaving a financial legacy to loved ones.

As you progress through life, your needs and priorities are likely to evolve. So, even if you already have life insurance in place, it could be worth assessing your current arrangements to ensure you have the appropriate protection.

 

2. Consider taking out protection against illness or injury

If you were to become unable to work due to illness or injury, could you get by without an income?

Depending on your circumstances, you might consider taking out protection to help supplement income lost while you’re unwell.

The most common types of cover are income protection and critical illness cover:

• Income protection: These policies typically provide regular payments to replace a portion of your income, should you become too unwell to work.
• Critical illness cover: If you are diagnosed with a qualifying illness, as specified by the provider, these policies usually pay out a lump sum.

You may choose to take out one type of cover, or both, depending on your needs. In some cases, you may find that such protection isn’t appropriate for your circumstances. By regularly reviewing your needs, as well as any existing policies, you can help keep your level of cover aligned with your requirements.

 

3. Make or update your will

Having an up-to-date will in place can help ensure your loved ones receive the inheritance you intend and can access the funds sooner after you pass away.

Even if you’re planning to leave everything to your spouse, a valid will can be invaluable in reducing the risk of disputes and avoiding lengthy probate processes.

Without a will, your assets will typically be distributed according to the rules of intestacy, which could result in your wealth being left to people you wouldn’t have chosen yourself.

Once you have made a will, it’s important to keep it up to date. A will made even one year ago might not reflect your assets, relationships, and wishes today. If you die with an out-of-date will, it could be very difficult for your loved ones to contest it in court and ensure your final wishes are honoured.

As such, it may be worth finding time this year to ensure your will reflects your current circumstances. A financial planner can help you review your existing estate to ensure your will accurately reflects your current wealth and wishes.

 

4. Register a Lasting Power of Attorney

If you were to lose mental capacity due to illness or injury, either temporarily or permanently, your loved ones could struggle to access vital assets or make key decisions on your behalf.

Registering a Lasting Power of Attorney (LPA) can grant your chosen attorney (or multiple attorneys) the right to make decisions for you, should you become unable to do so yourself. There are two types of LPA, and you can choose to register just one or both:

• Property and financial affairs: This grants your attorney the power to access and manage your financial assets on your behalf. It can be used both while you are able to make decisions independently and after you have lost mental capacity.
• Health and welfare: This allows your attorneys to make decisions about your healthcare and wellbeing, such as your treatment and where you live. It can only be used once you have lost the mental capacity to do so yourself.

While you might associate losing mental capacity with later-life conditions such as dementia, anyone can unexpectedly become unable to make decisions due to illness or injury. And, contrary to popular belief, your spouse, next of kin, or executors of your estate typically will not gain the automatic right to act on your behalf unless they are named on your LPA.

As such, registering both types of LPA provides valuable protection for both you and your loved ones.

As with wills, it’s important to keep your LPA document up to date. As time passes and relationships evolve, you may wish to change your chosen attorneys. Once you have lost mental capacity, it’s too late to register or update your documentation.

 

5. Create an emergency fund

None of us knows for sure when an unexpected expense might arise. Whether it’s house maintenance, supporting a loved one, car repairs, or redundancy, significant costs can crop up at any time.

As a result, it’s often worth having an emergency fund to keep money on hand, such as in an easy access savings account. The ideal amount to set aside will vary depending on your circumstances, but it is typical to aim for three to six months’ income in emergency savings.

That way, you and your loved ones can be better prepared to face unexpected costs without causing significant damage to your long-term financial goals.

 

Get in touch

Whether your 2026 goal is to build a comprehensive estate plan or protect your loved ones with suitable cover, get in touch to find out how we can help. Email info@chancellorfinancial.co.uk or call 01204 526 846 to speak to an adviser.

If you’re already a client at Chancellor, contact your personal financial adviser to discuss any of the content you’ve read in this article.

 

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate estate planning, Lasting Powers of Attorney, or will writing.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that life insurance and financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.