The decision to take out financial protection is often triggered by significant life milestones. However, research suggests that the cost of living crisis and changing lifestyles mean many families are overlooking the importance of a financial safety net.
Financial protection can provide you with money when you need it most. When it would pay out will depend on the type of financial protection you choose, but it could include if you’re unable to work due to an accident or if you’re diagnosed with a critical illness.
The payout can mean you’re able to meet immediate or long-term financial commitments if your income stops. It can also give you financial security so you can focus on what’s important, like recovering from an illness.
A third of under-35s say the rising cost of living is preventing them from getting on the property ladder
People often first think about financial protection when something in their life changes, including reaching traditional milestones. However, changing goals and lifestyles coupled with the rising cost of living means that many millennials are skipping or delaying these events.
Purchasing a home is often a common trigger for seeking financial protection. It’s easy to see why – a mortgage is normally the largest loan you’ll take out and it’s a huge financial commitment. According to a report in Professional Adviser, 1 in 5 people that have taken out life insurance did so when they purchased a property with a mortgage.
However, the cost of living crisis is affecting the age younger generations are becoming homeowners.
Almost a third of people under 35 said the rising cost of living has already stopped them from getting on the property ladder. A similar proportion also said that rising costs have either prevented them or will prevent them from moving out of their parents’ house.
So, many people are missing a key trigger that would lead to them thinking about financial protection.
Other life milestones may also be triggers for thinking about long-term financial security, such as getting married or starting a family. Again, these milestones are something younger generations are doing later in life or missing altogether as lifestyles change.
According to the Office for National Statistics, the average age to get married has been increasing since the 1970s – it’s now around 38 for men and 36 for women.
Similarly, the Professional Adviser report also found that 3 in 10 people under 35 are delaying starting a family because of the cost of living crisis.
If a financial shock could affect your plans, protection could provide security
While life milestones have traditionally led to people seeking information about financial protection, that doesn’t mean it can’t add value in other circumstances.
You may not have a mortgage, for example, but you could still face significant financial commitments, including rent. Or you may not have children, but want to take steps to ensure your partner would be financially secure if you passed away.
If you could struggle to meet your outgoings or maintain your lifestyle if you faced a financial shock, reviewing your safety net is worthwhile. It can give you peace of mind and improve your long-term security.
Financial protection could support other steps you’ve taken to boost your financial wellbeing, like creating an emergency fund.
Which type of financial protection is right for you?
There are several different types of financial protection to choose from. You can also select the deferment period and level of cover. So, it can be difficult to know which option is right for you and the security it would provide over the short or long term. We’re here to help.
Please get in touch if you want to understand how financial protection could provide a vital safety net for you, with your priorities and concerns in mind.
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.
Solus Financial Planning is not responsible for the accuracy of the information contained within linked sites.