Money matters, but life matters more.
Chance encounters, personal connections, and (to an extent) the unexpected all contribute to what the French would call, Joie de vivre. We use our money to serve these desires, as well as the more mundane side of life. We should also use our money to provide security, space, and options if the unexpected brings pain rather than joy.
Life has a habit of serving up the unexpected. In most cases this is a good thing – chance encounters bring joy. However, we may also experience life events which are unwelcome. Whilst a financial plan can’t stop these things from happening, a good one can help provide options and space to reflect and regroup if they happen.
There are three key solutions we can include in our financial plan to help manage the impact. They work by providing money to enable this regrouping to happen with less need to draw on your longer-term money.
Income Protection
If a change in your health means that you can’t work for a prolonged period, your income is likely to stop. An emergency fund provides a short-term buffer, but longer term your expenditure will need to be funded elsewhere. This not only reduces the money you have available to spend later, but stops you saving for that future where work is less important for life.
Income Protection provides some continuity of income enabling you to focus on your health rather than finances. Spending less of your savings means that it’s still there for the future when you need it to fund life.
Critical Illness cover
Processing and adapting to these situations often needs time, as well as money. Some changes might be practical. Spending money today that was earmarked for tomorrow will require future adjustments.
Critical Illness cover provides funds to enable you to keep your options open. This might be to pay for building work, support a sabbatical, or launch a new business! Using this money, rather than money set aside for the future, enables you to keep your options open.
Life cover
This won’t bring back a loved one, but it does provide space and options to those who are left behind. Some financial commitments may become a heavy burden, so providing money to settle mortgages and other debts (including Inheritance Tax) is welcome.
Money from life cover provides the choice whether to return to work, or take some more time out to regroup first. Using this money leaves other money available for your future plans whatever they might look like.
If you feel you might not be prepared for the unexpected and want to check if your money is best serving your life, contact us today.
This article is distributed for educational purposes and should not be considered investment advice or a recommendation of any particular security, strategy, or investment product.
