The Covid-19 epidemic has shown us all we can never take our financial situation for granted. Businesses can suffer, along with jobs and potentially investments. Our financial plans can be derailed through no fault of our own.
But there are ways to help us keep our finances on track, even when the world seems to be crashing around us.
Your financial safety net
The solution is to have a financial safety net prepared before disaster strikes. It needs to be tailored to your needs, and like any net, to be effective it needs several different strands.
An emergency fund to provide cash until things get back to normal is the first. Think about a cash reserve equal to about six months’ worth of your income. Keeping pace with your income and expenditure is important. As it grows so will your commitments. Your cash reserve should grow with it.
One solution is to put enough cash for the first month in an instant access account, and the rest in a higher rate account, with 30 days’ notice. You can set up a standing order to pay into it each month, leaving you with an emergency fund which could grow into a valuable nest egg if you are fortunate enough to never need to call on it.
At Continuum we can help you find the most rewarding home for your emergency funds here.
Insurance protection provides the other strands in your net.
Life insurance cover is vital. If something happened to you or your spouse/partner, it could pay off the mortgage, ensuring that your loved ones have a home, and provide a cash lump sum to replace an income. A Continuum Adviser could help you decide the level of cover you need and find the most cost effective policy to provide it.
As Covid has shown, health is fundamental to life – many of us are financially vulnerable in the event of illness or injury..
So, the next strand in your thread in your financial safety net should be Permanent Health Insurance or PHI. This pays a proportion of your salary in the event of illness or a debilitating accident that stops you working permanently and can continue until your normal retirement age, providing the premiums are maintained.
You might also consider Critical Illness Cover. This pays a tax-free lump sum if you are diagnosed with illnesses listed in the policy, which usually include most forms of cancer, heart attack and stroke. Like life insurance, it can be arranged to pay off your mortgage and provide a replacement income. You should always check which illnesses are covered in the policy as this may vary depending on the provider.
Finally, Accident, Sickness and Unemployment cover. This can provide a replacement income in the event of illness, accident or redundancy for a maximum of 24 months.
Arranging your financial safety net
Getting the cover you need for your safety net at the best price is vital, especially now when money can be tight for many of us. But you can’t afford to delay, because the younger you are when you arrange your cover, the less it can cost.
The Continuum team can help you see the level of cover you need, and the best way to provide it at the lowest possible cost.
Simply call us today. We can discuss your needs and ensure that you have the financial safety net you need.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products or investment strategy, you should seek independent financial advice before embarking on any course of action.
Book a free initial consultation
Book an initial consultation with one of our independent financial advisers or call us on 0345 643 0770 if you would like to discuss further.
Request a callback
Our services at Continuum are delivered by some of the most qualified advisers in the UK, to create the ultimate client experience.