Are you financially resilient?

Every household is unique but one thing they all have in common is that every household is dependent on income. Given the rising cost of living added to greater uncertainty in the job market individuals and families may want to review their financial resilience and create a financial safety net should they find themselves facing a sudden loss of income.

A study by Legal and General in 2020 found that the average household is just 24 days away from the breadline. But what does that mean exactly? Alarmingly, it means that following an unexpected loss of income the average household would be able to manage financially for around only 3 weeks before their money ran out. With the rising cost of living, the ‘deadline to the breadline’ could become even shorter, as the same amount of money is buying less and less. 

There are many reasons why you may experience a sudden, and unexpected drop in income. This may be temporary – due to redundancy, illness or injury, or it could be permanent, such as the death of a spouse or partner.

Won’t the State will support me?

If you become ill, and are unable to work, 72% of employers only pay statutory sick pay, which is just £99.35 a week – and is only payable for 28 weeks.

If you’re unable to return to work, there are benefits you can claim, however, a standard payment of universal credit, for a single claimant over 25 is £334.91 per month. You must have less than £16,000 in savings and investments too, so if you have more than that you’ll have to use your savings up first, before you’re entitled to help. Worryingly, over 60% of working families would be entitled to little, or no, state support.

Could you manage under those circumstances? What if your illness was critical? You may need months, if not years to recover. Would you want to worry about how you’d manage financially in addition to health worries?

What would happen if you died? What would your loved ones do?

How do you build financial Resilience?

When I think about financial resilience, and how robust my safety net is, I ask myself if something awful had happened yesterday, something unexpected and potentially life altering, what would I want to be happening today? Would I want to be desperately worrying about money? Or would I want to know that that was sorted, leaving me to worry about what matters most. So, I ask you, if something had happened yesterday, what would you want to be happening today?

When you start to ask yourself questions like this, and think about what a loss of income would look like for you, your family and your lifestyle it can all feel a bit overwhelming. This is why having a financial safety net in place is essential for many of us. But where do you start? The possibilities, and combinations of insurances you can take out are endless.

This is why asking a qualified and experienced Financial Adviser for help is a really good place to start.

What can I do?

There are many different policies, some you may have heard of like:

Income Protection- this pays out a monthly tax-free income in the event you are off work through illness (whilst this might not be life threatening it prevents you from working) to help towards your living costs, on top of any state support you may be entitled to claim, generally after any enhanced employer’s benefits end.

Critical Illness Insurance – this pays out an agreed amount, if you were to suffer one of an agreed number/type of critical illness which you are able to survive but may have life changing impacts within an agreed timescale.

Life Cover Insurance – this pays out an agreed amount, if you were to pass away within an agreed timescale.

And many more, offered by many different providers. The market can be confusing and contradictory.

How we can help?

At Blackthorn Financial Services Ltd we are fully Independent, unbiased and charge you no fee for our protection advice. We can help you choose the right provider and the right plans to build you a bespoke safety net to suit your needs and priorities and ensure that you understand the cover you have in place and how it meets those objectives. It is also about balancing those objectives with your budget because it might be that covering all eventualities would in itself require a mixture of different plans and would come at a cost that would impact your current lifestyle more than the life event you are trying to insure against.

We will go through your current financial situation, and listen to what your priorities are. We will help you identify how much you can spend on insurance to make you more financially resilient and identify if there are any other factors that should be considered – for example your medical history or the type of job that you do. We’ll help you to consider the most likely events that could happen and align that with your personal priorities, we will explore what cover you already have in place so you don’t end up paying for something twice.  Then, we’ll discuss how much you are prepared to pay for insurance as a whole so you can cover the things that are most important to you or most likely to occur that fits within your budget.