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Is it time to update your financial protection strategy?

This content is for information purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult your financial adviser here at InvestAcc Wealth Management in Cumbria, Teesside and across the North of England.

The UK is now starting to ease its way out of lockdown, yet concerns are still widespread about how Covid-19 will be contained and ultimately defeated. Here at InvestAcc, our financial advisers have been in regular discussions with people in Cumbria, Teesside and across the North of England about how the current situation affects their finances. Do you need to do more to protect your wealth and income at this time, for instance?

We offer some thoughts on this important topic of financial protection below. We hope you find this content useful. To discuss your own financial plan, get in touch via:

t: 01228 538 988
e: wealth@investacc.co.uk

Putting up defences

If there’s one thing our financial advisers would recommend at this time, it would be to ensure your financial protection plan has strong anti-scam measures in place. We have a full article on the topic here, but in short, the Financial Services Compensation Scheme (FSCS) has reported a concerning rise in Covid-19 scams in 2020. Be careful to read the advice and ensure your savings, investments and personal information are as protected as possible during these challenging times.

Addressing debts

Did you know that the average debt of a UK household (including mortgages) is £60,363? Our financial advisers suspect that this figure has probably shifted higher since the March 2020 lockdown, with the financial challenge this has brought. Whilst certain debts are less ‘urgent’ than others (e.g. your mortgage), others such as credit card debt can pose a huge drain on your monthly income, potentially jeopardising your financial stability.

As a result, another positive step towards reinforcing your financial protection plan is to address harmful debts where possible. Speak to your financial adviser if you are looking for options here. It might be appropriate, for instance, to move all/most of your credit card debts to a low-interest rate personal loan to ease some of the financial pressure and make things more manageable.

Life insurance

Nearly 11 million households in the UK have mortgages, yet only 42% of mortgage-holders have life insurance in place to help settle the debt should the worst happen to them. Life insurance has come into sharper focus lately, with many people worrying about the effects of Covid-19. This, unfortunately, has led to a rise in life insurance applications and costs.

Yet it is still possible to find a good deal with the help of an independent financial adviser, who can survey the whole market for you and find opportunities which you may have missed on your own. This is especially important to consider if you are a homeowner, with dependents (e.g. small children) and your family’s finances depend on your income. Should the worst happen, a much-needed lump sum could help your loved ones through the difficult time that would follow.

Income protection

Many people welcomed the government’s announcement in March 2020 to introduce the Job Retention Scheme, covering 80% of furloughed employee wages up to £2,500 per month. However, it’s important to recognise that this is coming at great cost to the economy and is unlikely to remain in place indefinitely. Recent reports show it is expected to continue until the end of October 2020. However, it does not cover those who might lose paid work due to serious illness or injury. Here, it’s a good idea to consider income protection with your financial adviser, particularly if your work involves higher-risk activities and if you are the main breadwinner for your household.

Emergency buffer

One other area of financial protection to mention is your easy-access savings. We understand that many people live from payday to payday. However, if it is at all possible to build 3-6 months’ worth of your household expenses, that would be a good start towards providing a strong ‘emergency buffer’. That way, if a broken boiler or other large, unexpected cost suddenly comes your way, it does not risk putting you into debt or threatening your financial stability.

Wills & probate

Finally, whilst it isn’t a pleasant topic, it is crucial to ensure that your property and possessions go to the right people in the event of your passing. By default, an individual’s estate will be dealt with via the UK’s intestacy rules which do not guarantee that your wishes would be respected. With a properly drafted Will, however, you can put the necessary measures in place to secure the right outcomes for your family in the future.

Conclusion

Financial protection is always an important topic, yet it is even more prominent in light of the situation with Covid-19. We encourage those reading this to consider their current position and contact a financial adviser about how to maximise your protection plan. A good rule in life is to put measures in place for the worst, yet move forwards with realistic expectations for the best.

If you are interested in discussing your financial plan, please get in touch with your financial adviser at InvestAcc Wealth Management in Cumbria, Teesside and across the North of England. Reach us via:

t: 01228 538 988
e: wealth@investacc.co.uk

May 15th, 2020