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Financial Focus On…Insurance

By Ensors Team
13th Jan 2017

Your car and your house are insured, but are you?

That is the question I pose this month and with good reason. If your car is involved in an accident, it is very likely that you will be covered by your car insurance policy. If a personal belonging is stolen, your home insurance policy may come to the rescue. On holiday, you should often take travel insurance. But what would happen if you were unable to work through long term sickness, injury or disability? Or even worse how would your family replace your income if you died?

Some people delay taking out income protection, “Key-Man” (for business protection) or life insurance because they think it is likely to be too expensive, leaving their income, business and/or family vulnerable in the event of something unexpected happening. But believe it or not, this is not always the case. Depending on your personal and health circumstances, (or additionally for Key-Man insurances, the value of the individual to the business) premiums that can be made for relatively modest amounts can provide a substantial level of cover ensuring protection for you, your family and your business. As an added incentive, depending on how a particular Key-Man insurance is arranged, the premiums for such protection may attract income or corporate tax relief.

Even those of us who like to think we have made adequate provision for our families by already having income protection or life policies could benefit from a review to ensure that the cover is still appropriate and up to date. Over recent years we have seen the insurance market become more aggressive and competitive which has seen many reductions in the relative cost of cover, despite the general upward trend in insurance costs generally. The result – even though policyholders may have aged since an earlier policy was taken out, the re-pricing of cover by insurance companies could mean lower premiums (or better benefits) than many existing contracts.

From personal experience, these policies are important. On redundancy, illness or injury, often the first things to be affected are your credit worthiness – often when you need it most.

But a note of caution with an important point – make sure that your application forms are completely accurate and truthful. In exactly the same way as non-original alloy wheels can affect a motor insurance policy, by being conservative with information when form filling could cause trouble in the future should you need to claim. An unfortunate case a few years ago saw an individual failing to give sufficient detailed information about their drinking habits when completing the health questions. Following the untimely death of the policyholder, the insurance company are now strongly contesting paying out the sum assured due to non-disclosure!