Most people understand the need for backing up their computers on a daily basis and even making sure another copy is kept off site to make sure data is kept safe in the event of computer breakdown, flood or fire. Most sensible business owners have contingency plans in place to cover many eventualities with regard to running their business properly. Nearly everyone has home and contents insurance.
So why do people pay such little attention to the potentially biggest disasters – the death, disability or serious illness of the main breadwinners?
Like all good disaster recovery plans you should look at all the possibilities and the potential implications on your family or business.
Ask questions both personally (both spouses) and with regard to your business (all key people) if your are a business owner:
- What are the financial implications of the death of this person?
- What are the financial implications of the disability of this person?
- What are the financial implications of the long term serious illness of this person?
Many people wrongly cover different people for the same level of insurance when the implications of the above are rarely the same. Joint plans are generally bad advice except for inheritance tax planning. Even covering your outstanding mortgage is unlikely to be correct as the financial implications are much wider and so the solution is more complex.
A mixture of term insurance (life and critical illness), whole of life assurance, income protection plans, accident sickness or unemployment plans, private medical insurance together with the correct types of trusts will usually supply the most suitable solution.
Good levels of insurance are the foundation of a solid financial plan which should be regularly reviewed by an experienced financial planner. The premiums are unlikely to cause you serious hardship but lack of suitable cover will almost certainly do so. Don’t let a disaster overtake you – plan for it today.