Protecting Yourself against Economic Instability
This article takes a brief look at income protection insurance. It examines the viability of using insurance to protect you and your family from the impact of the current economic crisis that the UK and Europe is experiencing.
Currently 40% of British exports go to the Eurozone, and the loss of these lucrative markets would hit the UK economy hard, and send it spiralling back into recession. It would mean many export-driven businesses would have to curtail any expansion plans, and make redundancies and cost-cutting measures to keep their heads above water. All those unfortunate souls who are forced to join the ranks of the unemployed would likely find it difficult to support themselves and their families on scaled back government benefits, while faced with the daunting prospect of finding a new job in an economic downturn.
Understanding the seriousness of the situation is the first step towards being able to do something about it. We are at the edge of a financial abyss, and anyone without a large pot of savings to fall back on needs to think carefully now about creating a safety net for the worst case scenario.
One option to protect you and your family’s income when faced with an uncertain future is to take out a lifestyle protection insurance policy. This will enable you to ride out the economic storm by supporting you financially in the event of you being made redundant. For those who rely on their salary to cover a mortgage, there are specially designed mortgage payment protection insurance policies, and there are also policies to cover those who pay rent rather than a mortgage.
Studies show that most families in the UK have less than the equivalent of 3 months pay in their savings, which means that if the main breadwinner lost their job, they would not be able to support their lifestyle long without finding another job quickly. Unfortunately, one of the worst aspects of the uncertain economic climate in Europe is that it is making employers extremely reluctant to take on new staff. Employers are waiting for the current troubles to pass, but they keep dragging on and on. This means that anyone made redundant right now could find themselves waiting a very long time to find another position in their field of expertise.
The key thing to remember with income protection insurance is that if you get to the point when there is a clear and present danger of losing your job, you have left it too late! Insurance providers are very selective about who they choose to cover, and the vetting process for applicants is very thorough. If you are working in a particularly struggling industry, or your firm has already started to make redundancies, the chances of you getting a good deal on income insurance is very small.
The best advice is to take no chances with your family’s financial security and book yourself an appointment with an insurance advisor as soon as possible. None of us know what’s going to happen with our economy, but if you prepare for the worst and hope for the best, you’ll be well placed to come out the other side with the finances of you and your family intact.
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ABOUT THE AUTHOR
iprotect Insurance is a leading provider of unemployment insurance. Visit iprotect for more infomation on income protection insurance in the event of redundancy.