Insurance payouts have hit record highs. Is your family properly protected?

When life throws unexpected events your way, it’s easy to look back in hindsight and wish you’d been better prepared.

Whether these events are positives – the birth of children or grandchildren, for instance – or negatives, like death and illness, ensuring you can financially cope with whatever comes could bring immense peace of mind down the line.

Unfortunately, without a sufficient safety net, your family’s stability could be put at risk if events outside of your control knock you off course.

If you were to pass away suddenly, for example, your family could struggle to fund their lives without your income – unless you had protective measures in place that might help them continue their lifestyle as normal.

Even if you do have protection already, the cost of living crisis and pandemic have altered the way we live our lives. These shifts could leave holes in your seemingly airtight emergency plan, potentially exposing your family to financial precarity.

So, continue reading to discover some often-overlooked gaps in your protection plan that could pose a risk to your family’s stability, and what the latest figures reveal about the reliability of financial protection in today’s world.

 

3 key ways your wealth could be at risk from unexpected events today

Ask yourself: “am I 100% sure I’ve done all I can to protect my family’s wellbeing if we faced a serious illness, a job loss, or even death?”

If your life has changed significantly in the past three years, it may be prudent to consider whether your family would still be adequately protected if the unthinkable happened.

Here are three key ways your wealth could be at risk in 2023.

1. If you’ve changed jobs since the pandemic, you might no longer benefit from employment-linked cover

According to statistics published by LV=, 9 million Brits changed jobs between the start of the pandemic and February 2022.

Labelled the “great resignation” by journalists at the time, this swathe of job changes meant that those moving to pastures new were likely leaving some employee benefits behind. This could even include cover in some cases, such as a death in service arrangement.

So, while you may have previously gained peace of mind from knowing your family could benefit from a payout if you passed away, this gap may now pose a risk to your circumstances if you have changed jobs.

2. If your finances are tight at the moment, you could have cancelled protection policies to save money

Many people are searching for ways to trim their budgets during the cost of living crisis – and new research reveals protection policies are often being placed on the chopping block.

Money Marketing data shows 1 in 7 adults is considering cancelling life insurance now to lower monthly expenditure while costs remain high.

If you’ve already cancelled essential protective policies due to the cost of premiums, it could be time to rethink this move with the help of a financial adviser. Leaving your family’s wealth exposed to unexpected life events might mean they experience significant financial difficulties down the line.

3. If you’ve not checked your circumstances in a while, your cover could have lapsed without your knowledge

Finally, your future stability could be put at risk if your cover has lapsed without your knowledge.

Whether it’s life cover, critical illness insurance, income protection, or any other protective measure, checking in with your existing policies might reveal gaps you didn’t know were there.

 

Protection payouts sustained a record high in 2022

If you often worry that taking out protection is “pointless” or believe “the insurer won’t pay out” – perhaps prompting you to stop paying premiums or delay taking out protection in the first place – the latest statistics could assuage those concerns.

Happily, new figures released by Aviva reveal that the provider paid more than £1 billion in protection payouts in 2022 alone – equivalent to around £2.9 million a day.

What’s more, this is the provider’s third consecutive year of paying out more than £1 billion, which could give you the confidence you need to protect your own family against the unthinkable.

The report states 99.4% of life cover claims were paid, followed by 94.3% of income protection claims and 93.5.% of those for critical illness cover. These overwhelmingly high percentages clearly exemplify that by making the decision to protect your wealth against circumstances that could arise, your family are likely to benefit from a payout if they had to make a claim.

Although the hope is that you or your family never needs to use this safety net, you can’t put a price on peace of mind – and protection can provide exactly that.

 

Get in touch

Working with a financial adviser can help you form a unique package of protection that meets your family’s needs.

To get started, check in with your current package of protection, or simply chat with a professional about your financial circumstances, email info@chancellorfinancial.co.uk, or call 01204 526 846 to speak to an adviser.

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

 

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Note that life insurance 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.