The common sense money guide financially Protecting the most important areas of your life

Think about the most important things in your life. Is it your home, your car, your television or your mobile phone? If you are like most people, the most important thing in your life is your family, your health and your ability to generate an income.

However, we tend to happily protect the assets we have which are lower down our list of importance, happily ignoring the fact that you should financially protect the areas which are of most important to you.

How do you protect your family?

Financially protecting your family is about ensuring that if you are not around to provide for your family, they will be looked after if you are not here to do it. The last thing a family wants whilst greiving for a loved one is to have to worry about paying the bills, ensuring the mortgage can be paid and stop enjoying the nicethings in life. Your future income is probably worth hundereds of thousands of pounds, and it is therefore incredibly important to ensure that you have cover to provide your family with this money in the event of your death.

If you are not employed, and spend time raising a family, consider the implications of providing childcare costs (if you spend time looking after children), or the amount of income required to do all the jobs you do within an househould. A recent Legal and General survey estimated that the value of the jobs a mum does is £32,000 per year, wheras only 53% of mums surveyed had any form of life assurance.

There are a range of methods designed to protect your family. One method is to take out a life assurance policy. These policies are designed to ensure that in the event of an individuals death, the individuals dependents (or whoever they choose) are provided with some money. There is a wide range of different policies available, and if you are unsure of the most appropriate provision for you, seek professional independent advice.

Another method of protecting your family is to self insure. This involves saving money on a regular basis so that in the event of an individuals death, your family are left with a sum of money designed to ensure that can afford to maintain their standard of living. This method may be appropriate for someone who does not like the idea of taking out an insurance policy, but it takes a high level of commitment and a large disposable income in order to save enough to ensure that your family are properly looked after.

Another method of protecting your family is to rely on other family and friends in order to ensure your family are financially looked after. However, this raises a big question...how comfortable would you feel relying on your parents, your friends, or even distance relatives to financially help out your family in the event of your death? Also, would they be financially able to?

Whatever approach you decide as the most appropriate method, one fact is undeniable, protecting the people you love the most is massively important.

How do you protect your income?

Imagine you own a machine. This machine sits in your front room and provides you with your regular income. Would you insure this machine to ensure that, if it 'broke down' you could still recieve the income it provided on a regular basis. We all know such a machine doesn't exist ( we all wish it did ), however the closest thing to this machine is you!! You are the person who generates this money and if you were prepared to insure the income generating 'machine', you should think about insuring your income in the event of you 'breaking down'.

The equivalent of the machine 'breaking down' is you suffering from ill health and being unable to work. If this occured, there are a number of things you can do to ensure your income continues. Firstly, you can look at looking at an income protection policy designed to provide an income in the event of ill health. You could also look at self insuring or rely financially on friends or family (see above).

There are a range of different policies designed to protect your income, ranging from the provision of an income in the event of recoverable illness all the way through to terminal illness cover. If you are unsure of what policy suits your needs seek independent professional financial advice.

How do you protect your health?

In the Uk, we have a state healthcare system (in the form of the NHS) which is designed to meet peoples health needs. The most effective way to protect your health is to eat healthier foods, take regular exercise and practice a good general lifestyle. Regular healthchecks are also important in terms of protecting your health, as these ensure that any health problems can be identified as soon as they can.

However, if you feel that the care provided by the NHS is inadequate, you have access to private healthcare. Private healthcare comes at an additional cost to you, however it is generally agreed that the care provided is provided more efficiently.

The other important area to consider is what would happen if you suffer a critical illness, and the lifestyle changes you may have to make to meet these needs. When suffering a critical illness it is important to look at the additional costs you may incur. For instance, would you need to make your home more accessible, or provide a lump sum so that you would not need to worry about your finances whilst recovering from a serious illness.

How do I know how much protection is right?

The first step is to complete a budget planner. This will give you an indication of your expenditure you or your family would need in the event of your death or illness. The next step would be either to calculate how much cover you need. You can do this yourself, however it is worth talking to an independent professional financial adviser to discuss your needs.

If you decide that you would prefer to calculate your need yourself, ensure you are getting the best deal by looking at a price comparison site.

These sites are designed to do the "shopping round" for you and provide you with a range of options with the associated costs. However, ensure that you compare the benefits of any policy as well as cost, as policies and the cover they provide can vary greatly.