Insurance is usually seen as a product that you take out when you purchase a product or asset.  You insure your phone when you get a new phone.  You are legally required to insure your car when you buy a new car.  You are legally made to obtain buildings insurance before you can buy a property with a mortgage.


It is common for people to also insure their lives and income at the same time as they get a new mortgage too, but I’d like to see a change to this tradition.


Some of the main insurance products people cover themselves for when they buy a house are life cover, critical illness cover and income protection.  All of these products can help replace lost income if you are unable to earn money at work due to accident, sickness or death.  The time when they buy a house is wrongly thought of as the first time people need to insure themselves as they will have an extra liability, but these products are not designed to insure against debt, they insure against loss of potential income.  So why do people not feel they need cover before this time?  If something happens whilst you are renting, surely it is still important to protect your rent payments, other outgoings and standard of living.


The point at which people should insure their own income is as soon as they can afford to do so.  If you imagine somebody who is 18 years old, lives at home and gets their first job, their greatest asset in life is themselves.  Somebody this age who is physically able to work could be doing so for over 50 years and easily has the potential to earn over a million pounds in wages over this period.  Yet, very few young adults will insure themselves against accident or sickness.  Not many adults in general do.  We tend to value our own worth much less than any physical item, but it is far more important because if you lose your ability to produce work and income, you will struggle to pay for those items anyway.


Jason Hinde FPFS, Cert SMP – Chartered Financial Planner

17th July 2017

When is the right time to protect yourself?