Prioritising Personal Protection Cover Amidst a Cost-of-Living Squeeze

Monday, November 27th, 2023

A recent study by the Association of Mortgage Intermediaries (AMI) has suggested that many more mortgage advisers are having meaningful conversations with their customers in relation to personal protection for themselves and their families. *

Despite many people feeling the “cost-of-living squeeze,” it is thought that this is in part due to changes made by the industry regulator around ‘consumer duty’ which includes the necessity to discuss and signpost various financial and protection products. 

Using Personal Protection Cover to Increase Financial Resilience

On this point, the advisers here at Caboodle Finance record that once customers discover that they may not have the financial resilience to cope financially if the unexpected were to happen, many are keen to explore the options available to them.

Although most people are aware of life insurance, many people do not know where to start with a ‘personal protection’ conversation or even what can be protected, which is why many choose to discuss the options and their requirements with a suitably qualified mortgage and protection adviser.

What Personal Protection Options Are Available? 

In general, the personal protection policies that are usually the most suitable and which are therefore recommended to many customers, depending on their individual needs, requirements, and budget, are one or a combination of the following:

• Life Insurance – Provides a tax-free lump sum upon the death of the insured person during the term of the policy.
• Critical Illness Cover – Provides a tax-free lump sum in the event the insured person suffers from or is diagnosed with a serious illness such as cancer during the term of the policy.
• Income Replacement Cover – Provides a monthly benefit in the event the insured person is unable to work for a prolonged period due to sickness, accident, or disability.
• Family Income Benefit – Provides a tax-free monthly income upon the death of the insured person during the term of the policy.

Clearly a comprehensive ‘protection conversation’ would cover all the relevant policy options based on the individual circumstances and the adviser would then recommend a solution based on the requirements, priorities, and budget available.

Closing the ‘Protection Gap’ by Addressing Some Misconceptions

This is set against the background that the UK still has a significant ‘protection gap.’ Although many mortgage and protection advisers are doing their best to address this issue with their clients, it is commonly felt and regularly discussed by industry experts and commentators.

that the problem is in part due to a misconception as to how personal protection products work and that any cash benefits are often much higher and the associated costs and premiums much lower than many people think.

It is for this reason that some people engage the services of a suitably qualified mortgage and protection adviser who will then be able to provide advice as to the most suitable solution in all circumstances.

With that in mind, if you would like to know more about the options that may work best for you, call one of our friendly experts here at Caboodle Finance of Sutton Coldfield, Birmingham on 0121 308 9114, or alternatively, just complete our online enquiry form HERE and we will be in touch.

We very much look forward to speaking with you.

_{*Source – Mortgage Strategy 31-10-23}

_{The information contained above was correct at the time of publication but is subject to change.}