First steps to protect family
Q My first child is due later this year. I want to take the right steps to protect my family financially should anything happen to myself or my partner, what should I do?
A Congratulations on your upcoming arrival! There are a range of options that should give you greater peace of mind that your family will be supported financially.
Life insurance provides financial support to your family in the event of your death. You can either have insurance cover for a specified period when your child will be financially dependent on you, or for your entire life, which can be more expensive but will also form part of your longer-term financial plan.
There’s also the option of income protection insurance. This can replace part of your income if you’re unable to work due to illness or injury, ensuring your family maintains their standard of living even if you can’t work.
Or there is critical illness cover, which pays a lump sum if you’re diagnosed with a serious illness. It can cover any expenses (ie, your mortgage or rent) while you recover, or pay for any private medical treatment.
And if you don’t have one already, now is a great time to write a will. This is important to ensure your assets are distributed according to your wishes. It also allows you to appoint guardians for your child.
Q What changes am I likely to see to my finances under the Labour Government?
A One of Labour’s main announcements that could have a direct impact on people’s long-term savings is the Pension Schemes Bill. The government has said that the measures set out in the bill could add an additional £11,000 or more to a typical pension pot. *
These measures include a new system to automatically combine small pension pots in one place, which should stop so many people losing track of various pensions as they change jobs over time. Research shows that around £50 billion is at risk of being lost in pension pots people have misplaced or lost track of. **
Under the bill, pension schemes will also have to offer retirement products to savers, giving people more options around taking income in retirement.
Watch this space, as more radical change could be on the horizon if the new government completes the full review of pensions promised.
In the meantime, any measures that enable people to save more for retirement are a good thing, although it’s important to remember that the growth of a pension depends on the performance of the investments held in it.
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