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What is financial protection?

How much protection you will need changes throughout your life as your family situation, employment, and financial circumstances change. Discover the ins and outs here.

2 min read

“Protection” refers to types of life and protection insurance which are put in place to help “protect” you, your income, your home or your family from unforeseen events such as critical illness or unemployment, and to help secure your financial future.

Your protection needs will change throughout your life as your family situation, employment, and financial circumstances change. It’s important to consider what kind of protection you might need and to review this on a regular basis to take into consideration any changes in circumstances. A good time to assess your requirements is when you’re reviewing your mortgage needs.

Common types of cover include:

Income protection

This is designed to support you financially if you can’t work due to illness or injury. It will replace part of your income and will continue to pay out until you can work again. The payments will be regular, tax-free instalments.

Mortgage payment protection

Mortgage payments are commonly people’s largest financial commitment so it’s important to think about protecting it. Sometimes known as Accident, Sickness and Unemployment cover (ASU), this policy will often pay out for a maximum of two years, so can give you peace of mind that in the event of redundancy or illness, your mortgage payments will be covered during this period.

Life insurance

Life insurance gives you the comfort of knowing that your loved ones will be provided for should you die during the term of your policy. When linked to a mortgage, life insurance will pay out a lump sum.

Critical illness cover

This is similar to life insurance but will pay out on the diagnosis of certain illnesses, as opposed to only paying out on death. You will receive a tax-free lump sum upon the diagnosis of your illness, and once this money has been paid out to you, the policy will end.

Buildings and contents insurance

Home insurance is a general term used to describe two very different types of insurance. Buildings insurance covers the building, permanent fixtures and fittings, such as kitchens and bathrooms. And contents insurance which covers things you keep in your home, such as furniture, TVs, personal belongings and some types of flooring, including carpets.

Mover protection

If you’re buying a property either as a home for you to live in or as a buy-to-let investment, mover protection will cover you from the unexpected when moving.

Your individual circumstances will dictate which policies are right for you. Our protection advisers will be able to help you assess your circumstances and choose the right protection for you, so please don't hesitate to get in touch with us.

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