If, like me, your head is full of tinsel and fairy lights this week, don’t fret: soon Christmas will be over, and the snow will be settling on the first day of the New Year.
January, of course, is the time for looking forward, and ensuring your financial wellbeing in 2018, with a review of your insurance needs.
Do you have, or do you need life insurance? Are you covered against losing your income due to serious illness?
There has never been a better time to get insurance. To understand why, we have to look back – let’s look at how difficult getting insurance used to be.
Things were very different a century ago, in the UK but particularly in the US, due to a widespread practice known as ‘redlining’.
Insurance companies used a red pen to circle certain boroughs of New York defined as immigrant neighbourhoods, branding them as poorer areas with a high risk of defaulting on payments.
You were also unlikely to be accepted if you had a foreign-sounding name, or even if you were called ‘Ellis’, having decided on arrival at Ellis Island that this was a wholesome American name.
Amazingly, the practice persisted right into the 1960s, when one insurance company in Manhattan still had a map in its underwriting manual with the traditional red lines plainly visible.
Redlining became more difficult with President Jimmy Carter’s Community Reinvestment Act of 1977, which obliged banks to offer loans and services in any area where they were accepting deposits.
It was less common, but not unknown in the UK too; in his ‘Little Money Book’, financial expert David Boyle states that in 1997, around 10 per cent of the population of Britain were still unable to get a bank account or insurance.
Thankfully things have changed, and in 2018 we can all protect our loved ones with a whole range of life and critical illness policies, under the umbrella of ‘family protection’ products.
Take critical illness insurance (CI) for instance. Today, with an average of 92 per cent of claims being paid, CI is a very reliable form of cover.
If you are among the 4.25 million self-employed people in the UK, the reasons for covering yourself against illness are even more obvious – especially if you’re a one-person-show, and sickness could mean your company ceases to trade.
‘Redlining’ is dead, but today it can be your profession, rather than your postcode, that will influence the quote you get. The high-risk groups of today may no longer be immigrants fresh off the boat, but your trade can influence the way the insurance company looks at you.
For instance, do you spend a lot of time up in the air? Yes, getting ‘too close to God’ can cost you, when applying for any kind of accident insurance – and you don’t have to be a steeplejack. This also includes scaffolders, building labourers, in fact any ladder-users, such as window cleaners and even painters and decorators.
The Unite union say that over a quarter (26 per cent) of all serious accidents on building sites result from falls from a height.
However, insurance is often referred to as a safety net that catches us when we fall, and it could be argued that these are the very people who could benefit most from the security of having a policy in place.
Then again, you don’t have to be a trapeze artist, to need CI.
Even in the relative safety of our offices we all stand a good chance of needing it. One in four men and one in five women will be off long-term sick, due to a critical illness, during their working lives. You are much more likely to fall seriously ill than to die, before you retire.
So why not take that red pen, and add a financial review to your list of New Year’s resolutions for 2018.
Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005. Further information is available of the Facebook page 'Kennedy Independent Financial Advice Ltd'
