your financial health

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Protecting your Dependants

It is important to think about how your dependants would manage financially if you died and to make what plans you can to provide for them. How much would your dependants need?

 

How much would your dependants need ?

Consider how much your dependants would need to live on after you die. Don’t worry if your figures aren’t 100% accurate, broad estimates are okay.  Remember to think about how long they would need to be supported after your death and whether their needs would change as they get older.

Try to build in the effects of any changes that they would have to make to the way they live, such as taking on additional child care for example. You might want to consider the effects of several different options. You may also wish to think about whether there is anything specific that you want to make sure is covered, such as paying off a mortgage.

 

Your Options

You could take out Life Assurance and Protection Cover to provide an income or a lump sum. For example, you might want to take out a policy that would pay off your mortgage but first check what insurance you already have.

  • Check whether you have any life assurance and protection at work and find out if you can pay extra to increase it if you need to this is often cheaper than arranging your own cover.
  • Check what any pension plans would pay out if you die and don’t forget to look at old plans as well as your current ones. You might also want to take any savings into account and if your dependants could use them.
  • Check out whether you would be entitled to any state benefits. You can do this via the Directgov website.

But, if you can, it’s probably best not to rely on these alone.

Protecting your Income

It is important to think about how you would manage financially if you were unable to work because you were ill or made redundant, for example.

 

How much do you need?

Try to get some idea of how much money you might need. A good place to start is by working out where all your money comes from and what you spend it on and thinking about how this might change if you couldn’t work. Using an online budget calculator might help you to do this. You might want to think about whether there is anything specific that you want to make sure is covered such as paying your mortgage.

Don’t worry if your figures aren’t 100% accurate, broad estimates are okay.

What do you have already?

Check what you have already. As well as any special insurance policies, you might also want to take any savings into account if you could use them to help tide you over. Look into what would be available through work but don’t expect too much. Sick pay may be less than you earn normally and might only be available for a limited period.  Find out whether you would be entitled to any state benefits. You can do this via the Directgov website.

It’s probably best not to rely on these alone as they may be a lot less than you are earning now and many are only available for a limited time or after a qualifying period.

Extra Plans?

  • If you can afford it think about how to make up any shortfall in your current plans.
  • If you can think about building up an emergency fund that could tide you over a few months without work.
  • You could consider taking out some insurance to provide an income or a lump sum but remember to look carefully at any restrictions on how much it would pay or when you can claim
  • Check out whether you can get any additional cover through work as this may be cheaper than arranging it yourself.
  • You could consider taking out an insurance policy specifically to pay your mortgage if you can’t work but remember to check what it would pay out and whether there are any restrictions on when you can claim.
  • You could think about switching to a flexible mortgage that lets you reduce your monthly payments for a while.

Reviewing you Plans

Remember to review your plans from time to time especially if your circumstances change.

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