So you’ve just had a baby - Are they Financially Protected?
Chances are if you are reading this you’ve just had a baby, it’s 2am and you’re up surfing around whilst the tiny new human sleeps or feeds in your other arm.
Those first few days are awash with everything new but once they pass and you start to feel a bit more human again you might be wondering what next.
Only now are you realising that the bump you saw grow for nine months is an actual person who needs taking care of and that you are more important than you have ever been to its survival.
How can I ensure my child is financially protected?
We start protecting our children from the very beginning. Monitoring what we eat, what we drink and what we do.
We put stair gates up, cover plug sockets and shorten blind cords. We do all these things because you can’t leave a baby on a play mat for more than five seconds before they have learned to roll over and grab the fire guard. Then you come back into the room and they’ve learned to climb and are falling off the sofa.
It isn’t only the physical danger that worries us about our children and their apparent lack of self preservation. Money worries are highlighted with a new baby because one or both of you have changing patterns to your work life. Childcare becomes an issue and you have to balance the costs. Do you know how your budget will stand up to unexpected changes?
You can protect your finances in a number of different ways, each will have its benefits to your personal circumstances.
Different types of financial protection
- Emergency fund
This isn’t a policy that you can buy, rather it is a separate account where you keep a rainy day fund. We usually suggest 3 x your net monthly income in an instant access account.
- Life Insurance
Life insurance is a very simple concept. If you die, the policy will give you money. If you are working this money can be used to pay off your debts or replace your income to make sure your children and family are taken care of if you pass away.
- Critical Illness Insurance
This can be a stand along protection or added to life insurance. It is a more expensive policy type due to the higher probability that you will need to claim but it is worth weighing up the extra cost. It will cover against such illnesses as advanced cancers, stroke or heart disease which may not kill you but could mean you are unable to go back to work. You can use this money again to pay off your debts or replace your income but it may also help pay for specialist treatment which could be costly to access.
- Income protection
This pays a regular amount to replace a portion of your earnings if you are unable to work due to sickness or disability. There is no list of defined conditions as there is with critical illness so a wider range of conditions can be covered.
There are other providers of Payment Protection Insurance [Short-Term Income Protection] and other products designed to protect you against loss of income. quick read of only 588 pages.
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- Accident, Sickness and Unemployment
A shorter term policy that pays a portion of your earnings if you are unable to work due to sickness or disability or are made redundant.
It’s the old adage of not putting all your eggs in one basket and the same is true of your financial protection. Having one or two back up plans should the worst happen will mean you have less to worry about if the time comes.
Any of the above can be a lot to consider and take in with the amount of information available online and it can be hard to know what is right for your circumstances.
To get more information please contact us by phone or email, you won’t be the first person to email us 4am with questions!