Cover your family in case you can't ‘bring home the bacon'
Here's a question for you: do you like bacon? Even if you don't, would you be able to ‘bring home the bacon' to pay your family bills if you couldn't work?
The average UK employee has enough savings to keep the household for 32 days, if they stopped earning.
Two out of five men and one in five women will find themselves in that situation during their working lives, because they will be unable to work due to a critical illness.
But Legal & General tell us that only one in 10 of us has done anything about it.
That means most of us have not done anything to protect our family against the prospect that the house may lose its main bread-winner, possibly for a number of years, if not forever. These are not pleasant facts, but I don't make the rules.
Most families are heavily reliant on the main earner. So let's take a hard look at a few of the rules.
More than half of us will get some form of cancer in our lives; about seven million people have a heart and circulatory disease, and every day, 545 people across the UK are rushed to hospital with a heart attack.
The fact is, our health is fragile, and that means so is our children's welfare, if we get sick.
In the 1960s, more than seven out of 10 heart attacks in the UK were fatal. Today, at least seven out of 10 people survive. It is great news that we are getting healthier, but if it gets you, you will still need time off to convalesce, and during that time, you will need a replacement income.
Insurers tell us that cancer, stroke and heart attacks account for approximately 80 per cent of all critical illness or income protection claims. Add in the other major illnesses multiple sclerosis, Alzheimer's and motor neurone disease, and you're getting closer to 90 per cent of all claims.
It makes so much sense to cover your family against the possibility that you may lose your health and be unable to ‘bring home the bacon' for a while.
If you do agree, then coming in to talk to us (us being financial advisers) is very important, because applying for and arranging insurance for these situations is not so simple.
This is where I introduce you to the phrase ‘inadvertent non-disclosure'. This is where you take out a critical illness or income protection insurance policy but are not aware of a previous history of heart disease in your family.
If you ever have to make a claim, they will probably check your family health records, and if your dad had a mild heart attack that he only told his GP about, it could affect your claim.
Now, insurance companies are very good at paying out these days, but it is in our interests, and very important to get it right when setting it up.
All insurances cover the main critical illnesses. Many cover many more, and there are a range of cost options that will ensure your family's lifestyle is not affected, if you are out of work.
You can arrange for a tax-free lump sum which could pay off the mortgage, or a monthly payment that would replace your lost salary for an agreed term, and make sure your children could still go on all those school trips - with a bacon sandwich in their tummies.
:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005. More information on Facebook at Kennedy Independent Financial Advice Ltd or at www.mkennedyfinancial.com