One of the lasting legacies of the current pandemic should be the refocus on protection needs in financial planning.
Now more than ever, financial advisers should be having professional balanced, sensitive, and people-centred conversations about their clients individual and business protection plans, founded on carefully constructed audits.
Asking people to look at their own circumstances through protection health checks is an effective way of assessing their understanding, stimulating a discussion and enabling them to assess the risk. It seems that one of the main reasons for the gap in personal protection is that individuals believe they are already covered adequately and therefore do not require any further protection, but in reality, they couldn’t be any further from the truth. Many of us do not know how much cover we really have or exactly what is covered in our existing policies let alone look to challenge whether the level of cover amounts to enough. This is especially the case for families who are financially dependent (full or in part) on a parent.
• More people are seeking protection at the moment
• What is ‘enough’ cover is subjective
• Many think they are covered by their company
• When last did you review your level of cover?
Of course, what constitutes enough is highly subjective. However, the reality that many people are falling short of receiving adequate financial support during these unforeseen times should encourage all of us to at least review our current protection plans and check that we have enough cover in place to ensure our longer-term financial wellbeing.
Could your family cope with a sudden loss of income in the event of illness or death? The realisation that many of us couldn’t is why we protect our family’s financial future with life assurance.
But new research suggests too few of us are doing it, leaving us just months away from not being able to pay the bills. When it comes to protecting ourselves and our loved ones financially, Ireland as a country is under-covered.
One in two adults in Ireland don’t have life cover at all. That means 360,000 families are without cover and almost half a million children in Ireland have parents with no life cover. Two in five claim their household would struggle financially should their income be lost through death, illness or injury. Working adults say they could only survive for six months on average in the event of a death, an illness or injury. One in every two people put the issue of family protection on the long finger as they have just not thought about life insurance or have not got around to it or they don’t think they need cover.
Of course, no one likes to think about death and illness. Ironically, by taking out a policy that protects your family in the event of death or serious illness, you are actually giving yourself peace of mind knowing that you will still be able to pay the bills in the here and now.
Less than half of women in Ireland have some form of financial protection, compared with two thirds of men. The figures hold not just for life assurance but for specified illness cover and income protection.
It’s really important that women take time to assess their own financial protection needs and what they can do to protect themselves and their family against any unexpected events.
Very often this is forgotten about or even delayed due to the hustle and bustle of everyday life.
We need to make women in Ireland more aware of the real benefits of life and specified illness cover, as it can be a lifeline for them and their families in times of difficulty.
• Tom Barry (QFA RPA SIA), financial consultant, FDC Financial Services Ltd.