People are far more likely to insure their cars, mobile phones and pets than themselves, their homes or their families. Yet protection can provide you and your family with essential financial resilience if the worst should happen.
There are many myths and misconceptions surrounding protection. In this article we bust some of the myths to help you decide if protection could be the right solution for you.
Mythbuster 1: it’ll never happen to me
It’s human nature to avoid thinking about death or being diagnosed with serious illness but unfortunately these things can, and do, happen. Being diagnosed with a serious illness can be more common than you
think and it can have a significant financial impact:
- Every 5 minutes one person suffers a stroke
- 7.6 million people are living with a heart or circulatory disease
in the UK2 - 4 out of 5 people with cancer find themselves on average
£891 worse off a month as a result of a cancer diagnosis
Mythbuster 2: protection is too expensive…
There’s a negative perception that protection is too expensive, but not having protection in place could prove to be even more costly. The cost of £100,000 of life cover from Scottish Widows for a male or female, non-smoker, aged 32 for 33 years is £10.63 a month. When you compare this to what you might pay monthly on things such as TV packages, your daily coffee, or insuring your pets, it doesn’t seem so expensive. For example, the average UK household spend on hotels and restaurants is actually £150.80 a month.
Mythbuster 3: protection doesn’t pay out
A common misconception is that insurance companies don’t pay out claims. But data from the Association of British Insurers shows that in 2022 UK insurance companies paid out £6.84 billion in protection claims supporting 308,270 individuals or families when they needed it most. That is an average of £18.7m each day.
Here at Scottish Widows, in 2023, 99.4% of all Life Cover claims were paid and 92.3% of all Critical Illness claims were paid.
How can protection help?
If the worst should happen, some people might rely on their savings, the state, or turn to family or friends for financial support, but could this really be a long term solution? Protection cover can provide you and your family with financial resilience in the event of serious illness or death.
1. Life Cover
Designed to pay out a tax-free cash lump sum if you die or are diagnosed with a terminal illness during the term of the policy. You can choose to have the cash paid out as a lump sum which could be, for example, used to pay off the remaining mortgage enabling your family to stay in the family home. Alternatively, you might prefer to have any cash paid out on a monthly income benefit basis. This could help your family meet other monthly commitments such as child care, credit cards payments, car loans and utility bills.
2. Critical Illness Cover
Pays out if you’re diagnosed with one of the critical illness conditions covered by the policy during the term you want the cover to last. Having critical illness cover in place could help ease some of the financial burden and allow you some breathing space to focus on getting better. You can get a critical illness cover policy on its own, or you can get a policy that also includes life cover – a Life with Critical Illness Cover policy. This type of policy pays out if you’re diagnosed with one of the critical illness conditions covered by the policy, diagnosed with a terminal illness or die, whichever happens first during the term of the policy.