5 life events when you may need to review your financial protection

Major life events like welcoming a new addition to the family or moving home can be incredibly exciting and emotionally charged periods in your life.

In all the excitement of bringing your new son or daughter home from the hospital or carrying your partner over the threshold of your new home, thinking about your financial protection will likely not be your focus.

Indeed, a recent survey by LV= revealed that a third of UK adults don’t consider updating their cover when their circumstances change.

However, reviewing your financial protection following big life events is important as what you have may no longer suit your needs. For instance, if you took out a life insurance policy before you had children, the payout if you were to pass away now may not be enough to maintain your family’s lifestyle.

With that in mind, read on to find out five life events when it may be wise to review your financial protection.

1. A new addition to the family

Becoming a parent is a remarkably exciting new chapter. From the moment your baby is born, this tiny new person will rely on you for absolutely everything.

Whether changing nappies, baby-proofing your home, or decorating the nursery for your gorgeous new son or daughter, you’ll have plenty of responsibilities that will take your focus in the weeks and months before and after the birth.

Yet, while an incredibly joyous time for everyone involved, having a baby increases the need to make sure that your family is protected financially.

According to Times Money Mentor, in 2023, the average amount of money spent on raising a child from birth to 18 in the UK is £223,256 – around £12,400 a year, or £1,030 a month.

So, it’s important to think about what would happen to your family if you had an accident or suddenly became ill – and how that might change with the added expenditure that comes with raising a child.

For instance, income protection could help provide your family with a regular income should you have an accident or end up in hospital and be unable to work.

Similarly, having family income benefit insurance means your loved ones could receive regular financial support if you pass away or are diagnosed with a terminal illness.

Reviewing your financial protection and having the safety net of a regular income could provide you and your loved ones with the confidence of knowing you can continue to afford your regular outgoings, no matter what happens.

2. Tying the knot

Getting married or entering into a civil partnership is one of the most significant moments in any person’s life.

With your focus on planning for the big day for the months beforehand, followed by your honeymoon, comparatively mundane considerations like financial protection can easily be forgotten about.

However, after the excitement of the big day has died down, you may wish to review your life insurance and amend it to reflect the change in your circumstances. Similarly, you may want to add your partner as a beneficiary should something happen to you.

If you rely on both sets of income to maintain your lifestyle and cover all monthly expenditure while allowing you to save for the future, you may wish to take out income protection too. That way, you’ll both be protected financially if either one of you is unable to work due to illness or an accident.

3. Moving home

Moving home can be an incredibly exciting new chapter in your life. With a fresh move, you’ll no doubt be excited about decorating and putting your own stamp on it.

Among all the change, though, it’s important to review your life insurance or mortgage insurance. As a mortgage is likely to be one of the biggest debts you could leave behind should the worst happen, having financial protection in place could be incredibly prudent.

For instance, if you have a repayment mortgage, you may wish to take out protection that will decrease in line with your reducing mortgage balance.

This way, should something happen to you before your mortgage is repaid, your family should be able to use the payout to pay the mortgage in full. This may allow them to  remain living in the family home without worrying about how to meet the monthly repayments.

Similarly, it may be a sensible option to take out critical illness protection or income protection to provide you and your family with a regular income. Both of these options could be used to help cover your mortgage repayments if you’re unable to work due to illness.

4. Divorce

Separating from your partner and getting divorced can be an incredibly stressful and emotional time.

While a difficult situation for both parties, updating your financial protection, such as your life insurance, could at least provide you with some peace of mind.

Indeed, while it may have made sense to put plans in place to support your partner should you pass away or have an accident, you may now want to amend your named beneficiaries to either your children, grandchildren, other loved ones, or your new partner.

Additionally, if you had protection in place, seeking financial advice could be prudent as this can rarely be “split” between you.

We can help review your protection and advise you on how to deal with any existing cover, and what safety net you may need now your circumstances have changed.

5. Bereavement

If you’ve ever lost a loved one, you’ll know how emotionally difficult the grieving process can be.

Indeed, in the aftermath of losing someone, it can often be overwhelming to carry out any day-to-day responsibilities.

However, if you’re recently bereaved, you may wish to review and update your life insurance policies to protect yourself and your family financially.

For instance, if you held a joint life insurance with your loved one, you may need to think about whether you need to update your cover so you remain protected.

Moreover, you may also have named your loved one as a beneficiary of your own insurance policies.  If so, you’ll need to rethink who you need to name on your policy to ensure that your payment can be made to the most appropriate person.

Get in touch

If your circumstances have recently changed and you need to review your financial protection or amend your financial plans, speaking with financial planners could offer great value.

We’ll help you understand how the changes to your circumstances could affect your financial goals and identify the most suitable way forward. Please email info@harperlees.co.uk or call 01277 350560.

Please note

Note that protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse. Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.