Now we must “live with COVID” I have found greater numbers of clients starting to question their own financial and business stability and thinking more about the longer-term impacts Covid will have, whether this be health or financial related. Many people accessed the financial support from The Government through furlough, temporary changes to Statutory Sick Pay or bounce back loans and financing, however, with this safety net removed, a substantial number are now faced with rebuilding savings and making repayments to borrowings, all coming at a time of huge rising living costs.
In my conversations, clients do understand the importance of being self-sufficient and hoping to be fit and healthy, however, the impact of being unable to work due to an accident or illness, the diagnosis of a critical illness or worse still, the event of death, can have a significant impact both personally and for any business.
Many households are reliant upon two working incomes, yet according to Legal & General, two in five households have less than £1,000 in savings, with one in five having no savings at all. Taking this into account, it is fair to assume that savings will not be a realistic ‘Plan B’ for the majority if unable to work.
Being unable to work due to an accident or illness can cause a lot of financial strain on any household. How will the bills be met? Do you borrow money to get through such a time? How do you cope with the additional stress and strain when recovery should be the key priority?
The diagnosis of a serious illness could mean that not only are you unfit to work, but your living expenses increase further. How far might you have to travel for treatment? How will you get there? Who will take you and how will that impact them, will they miss work themselves to do so? Or if at home, how much more will the likes of utility bills such as gas, electric, oil - which are dramatically increasing at present - cost, or is the home still even suitable for your needs?
In the very worst-case scenario, if you or a loved one passes away, what does that mean for those left behind? As mentioned, many households are reliant upon two incomes, usually mortgages or rent still need to be paid and additional finance or borrowing need to be considered, so how do you cope both emotionally and financially?
In Legal & General’s State of the Nation report, 75% of businesses have some form of debt and 94% of businesses recognise that they have at least one key individual, with more than half of businesses believing that they would be in the unfortunate position of having to cease trading within 12 months of a key person passing away.
However, the risk to any business is not just limited to losing a key individual through death, but should they go on long-term sick and be unable to work.
Businesses have many of the same financial exposures as any household, such as, if something happens to affect income how do you maintain costs and expenses going back out? Banks and finance companies might be less likely to offer even short-term borrowings and may wish to call in existing arrangements early if they feel concerns over the stability of the business from the loss or illness of any key people. A businesses owner insures their premises, machinery and protects the business against liability, so why would not you protect the key people who help to create the revenue and profits of the business? This is merely a snippet as to risks and concerns, and for the majority, a subject that has been avoided, could be perceived to be too expensive, or just seems too complicated and/or not knowing where to start.
Seeking the right advice is vitally important to ensure that your key risks are identified, and the right solutions put into place. Comparison sites may tempt you to ‘do it yourself’ but how would you know what is the right solution? Do you understand all the jargon? How will you ensure that a claim is processed correctly if needed? How do you ensure that the claim payments will go to the right people and not cause financial implications further down the line?
If I had a medical issue, I would not only see my GP to get diagnosis and treatment, but I would also want to be referred to see a specialist in that field, someone who really knows everything there is to know, to identify the exact problem and offer the right solution. Good quality protection advice is exactly the same.
Whether it be the need to protect yourself, your family or your business, affordable solutions are available to ensure that when things do not go to plan, a financial safety net can be in place to help you recover and take away the stress and financial burden. Protection policies can become that affordable ‘Plan B.’