Life! It’s a risky business.

13 November 2017

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There’s no avoiding the fact that life can be a risky business. You only have to tune into news reports to see how easily and unexpectedly, life can be turned upside down.

In my experience, the older I get the more often I come face to face with those risks.  My 50’s have been consumed with loss, add to that recent political and economic turmoil and I’m feeling a little bit more vulnerable than I once did.  Working in this industry makes me all the more aware of the day to day challenges these risks present and the havoc they can wreak on long term plans.   And it’s true that the more you earn, the more you have to lose.

Let’s compare a young couple in a 2 bed semi with 2 young children, relatively small salaries and no savings v’s a slightly older couple with grown up children at university, living in their detached property, they have ISA’s, investments and pensions.    At first sight you might think that the young couple need protection but the more mature couple have enough capital to keep them going should they hit a bump in the road.  But is this really the case? Personally, I don’t think so. 

Should the young couple ever have to rely on the state, the gap between what they earn now and the support they get would be smaller.  That’s not to say they wouldn’t struggle to meet their commitments, it’s just that everything will hit on a smaller scale. In the case of the more affluent couple that gap is likely to be huge.

The majority of more affluent clients have highly paid jobs or a business of their own. They generally have a pretty good lifestyle too. Their children might be in private education, maybe they have a few nice holidays in a year and a couple of cars in the driveway. Importantly, they could have a pretty substantial mortgage on the family home, they might even have some debt. So now let’s imagine that illness comes along.  Even a substantial amount of savings is unlikely to fund that kind of lifestyle for very long. How long before this family has to raid the piggy bank, cease pension contributions and sell the family silver?  And what impact is that likely to have on long term plans?

I understand that when the world is rosy it’s difficult to have the protection conversation but if your clients really understood the risks they face they’d probably be far more willing to listen. Most of us bump along never thinking that illness will strike and fervently hoping that it won’t.  I’d had it pretty easy until my late forties.  All was good in Denise’s world but as I approached my fifties it all changed. I don’t know who these people are who are living to 100 but it’s not anyone I know.  In the last few years cancer and cardiovascular disease have cut a swathe through both family and friends. My little bubble has been well and truly burst. Consequently, I’m fully aware of the additional costs and challenges illness throws up. If you have any doubt about the impact illness has on financial stability, take a look at MacMillan Cancer’s No Small Change Report.  It makes for grim reading.

We often talk about peace of mind but what protection products really offer is freedom and choice.  The freedom to walk away from work in the event of a life changing illness and the choice to make significant changes to accommodate a new reality.  Even when the world around you is tumbling down.

Last updated: 13 Nov 2017

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.