Preparing for all eventualities

When thinking about our future, generally we like to focus on the positives; all the exciting events and milestones headed our way. However, life often has a habit of throwing up an unforeseen moment from time to time, and the purpose of this post is to provide you with some pretty simple hints and tips to help make sure you prepare yourself as best you can for the unexpected.

Make sure you have adequate financial protection:

Dying early is not something any of us like to speculate about, and it’s natural for many people to have the ‘it won’t happen to me’ mindset. Of the 299,853 deaths reported in the UK in 2020, 24,777 were people aged between 18 and 60 (8.26%)[i], suggesting that it may be more common than you think.

We often see clients that are underinsured, not only on death, but also if they couldn’t work for an extended period of time due to illness or injury, which is even more likely than premature death. It’s likely that many households would struggle to pay the bills or maintain their current standard of living on only one income. Having a policy in place to protect yourself and your family can make a huge difference if the worst was to happen.

There are a few misconceptions about personal insurance, perhaps that it’s always expensive — the cost depends on your age, health and level of cover you want. Having some level of cover in place in line with what you can afford is certainly better than nothing, and generally speaking the younger you are, the cheaper it is. Some people have a sceptical view on insurers, that perhaps they won’t pay out when you need them to. In 2020, an analysis of 9 major UK insurers showed that all have life insurance pay out rates of over 95%[ii]. Making sure you complete any medical questions fully and with complete honesty on application will help with the success of any future claim.

Everyone will have different requirement based on their personal circumstances, and although it is hoped you won’t ever need to claim, taking the time to put some cover in place and ensuring it is set up correctly (i.e. putting life cover into Trust) is vital.

Wills:

On a similar note, we often see people who don’t yet have a Will. A Will is a legal document that states how, and to whom, you would like your assets to be distributed on your death. If you were to die without a Will, your assets have to be distributed in line with strict rules.

For example in England, if you are married or in a civil partnership with children, the spouse or civil partner would inherit the first £270,000 of assets and anything in excess would be split 50/50 between the spouse and any children. If you are unmarried with children, your partner would not receive anything! It would be split equally between your children.

Straight away, it’s clear to see the potential problems that not having control over who inherits your estate could cause. A Will ensures that your wishes are carried out on death, and can often prevent issues and even family disputes down the line. In addition, a Will can also speed up the administration process of distributing assets, meaning that your loved ones can inherit them quicker.

Death Benefit Nominations:

Death benefit nominations or expression of wishes are documents associated with pension plans. Similar to a Will, these help the pension provider decide who inherits any unused pension funds on death. The funds within most pensions can be passed on to whomever you choose; family, friends or even charity and you can update the nomination forms as often as you like. Just a really simple bit of admin that can help ensure the people you want to benefit, do so.

Keep your policy documents in a safe place:

Finally, a really simple one. If you’ve already done some or all of the above then great! But it’s very important to keep these important documents in a safe place, and that the people close to you know where they are when needed. There’s little point taking the time and expense to make a Will and then it’s nowhere to be found on your death. Some people even buy special fireproof boxes to make sure documents such as Wills are protected in all eventualities.

Summary

Hopefully these hints and tips have been useful, but it’s understandable if they seem daunting to approach on your own. Don’t be afraid to reach out and seek help or guidance from a professional — it’s what they are there for!

[i] Deaths registered by single year of age, UK — Office for National Statistics, Deaths registered by single year of age, UK — Office for National Statistics (ons.gov.uk)

[ii] Life insurance payout rates explained — Money To The Masses