News details
Prepare for the unexpected
5/10/2010
Alok explains the importance of using sensible financial planning to be prepared for the worst. The disruption that the Icelandic volcano has caused throughout Europe proves just how vulnerable we all are, and how unprepared we are for the unexpected. An estimated £2billion has been lost in revenues since the volcano caused the airspace shutdown, dealing a crippling blow to the economy that nobody could have foreseen. British Airways alone has lost up to £20million a day and, worryingly, it took five days to organise a conference call with ministers of transport. The situation proves that when catastrophe strikes, everyone panics if they find themselves unprepared. This is an ideal opportunity, then, to reflect on the state of your financial planning. For instance, do you know what would happen to your family if the main breadwinner was struck down by an unexpected illness or suddenly died? Without adequate life/critical illness cover in place, your whole future could be paralysed, impacting directly upon your family. It’s a risk that nobody can afford to take. Business owners should also consider a key-person insurance policy, which can protect the company by paying the costs of a temporary replacement, meeting the costs of recruiting a permanent replacement and covering the cost of death or incapacity of a key member of staff. As Benjamin Franklin said, the only certainties in life are death and taxes. All other potential eruptions, whether these are financial or health-related, must be insured against. Although death can seem to be an uncomfortable and often taboo subject to discuss in financial terms, it is so important to set some time aside with your family to plan for the worst case scenario. There are many policies specifically designed to help your family financially, should the unexpected occur, so don’t put off the chance to find the best policy for you. Life Assurance, for instance, pays out a guaranteed lump sum to beneficiaries in the event of premature death. There are several affordable policies available, such as: · Decreasing Term Protection Plans - this is a form of life insurance which covers you for a set term and pays out a lump sum if you die during the policy term. The amount of cover decreases over the term of the policy. As the life cover reduces, the monthly premium remains constant over the term of the policy. This is mainly used for mortgage repayment protection. · Family Income Benefit - Rather than providing a lump sum should you die, family income benefit provides a regular, tax free, monthly income for your dependants - from the time of the claim to the end of the plan term. Life Assurance policies are diverse and complex, so it is important to seek the advice of an Independent Financial Adviser when deciding which one to choose. At least the Icelandic volcano has only wreaked havoc in an economic sense, but the utter scale of destruction it has caused should be ringing alarm bells for all of us. One of our most influential leaders, Winston Churchill, understood the value of life insurance, saying: “If I had my way, I would write the word ‘insure’ upon the door of every cottage and upon the blotting book of every public man, because I am convinced, for sacrifices so small, families and estates can be protected against catastrophes which would otherwise smash them up forever.” In this period of uncertainty, there has been no better time than now to consider Winston Churchill’s advice and take a careful look at your own circumstances. Don’t forget to consult an Independent Financial Adviser, to ensure that you’re never caught out by an unexpected disaster which could cost you, your family or your business a lot more than the price of a flight ticket. For further information on how Alok Dhanda can help you with your personal or business planning needs, contact Dhanda Financial, 52 Dean Street, Newcastle upon Tyne, NE1 1PG, telephone 0191 255 8960, or email alok@dhandafinancial.com
