With more than 9 million employees expected to be furloughed during lockdown, the estimated cost of these measures is expected to be in the region of £40 billion. Combined with the multitude of reliefs and loans that have been announced alongside the furlough scheme this represents an unprecedented level of financial support to businesses and employees across the UK.
Given the extraordinary circumstances surrounding the COVID-19 pandemic these measures are necessary to try and keep businesses afloat; but they also highlight just how quickly financial problems can occur for both business owners and employees alike.
Let us assume that the government took a more laissez-faire attitude to the situation and didn’t offer this financial support or perhaps consider an industry specific issue that could cause a collapse in your company’s pipeline. Would you have the ability to maintain your current standard of living throughout such an event and if so, for how long?
Saving for a “rainy day” appears to have gone out of fashion over recent years, with the mentality of “live for today” taking its place and to an extent this is good to see. Living life to the fullest is something we work towards for all our clients, but it should also be tempered with a “plan for tomorrow” attitude as well. With the financial demands of modern life, achieving both of these objectives at once can be difficult and needs a comprehensive understanding of the tools available to as well as your spending patterns in any circumstance (refer back to my blog from last week to grab a copy of our expenditure questionnaire that can help you with the latter).
For starters, maximising the returns from your savings by seeking out the best interest rates available or increasing the chances for a higher investment return through a well-structured portfolio is a great way to get your excess income working harder for you. However, as we have seen during the current climate, short-term stock market falls can cause headaches when trying to access your money during tough times. This is where insurance products can play a vital role in a well-rounded financial plan.
In the event of being unable to work due to illness or injury, income protection policies (also known as Permanent Health Insurance) can help to provide a replacement income and can be purchased by businesses as a group benefit or as a personal policy. Critical illness Cover can also be taken out to provide a lump sum benefit in the event that you are diagnosed with a specified critical illness.
For businesses, it is important to obtain cover for any key members of staff through policies known as “Key Person Insurance” which will provide a lump sum benefit to the business if that key employee was to die.
With all these different types of cover and more available, it is vital to ensure that you have the correct type of policy in place as we come across many clients who think they have adequate cover, when actually it is not going to achieve the purpose they originally had in mind.
If you would like to consider your contingency plans and what protection may be best suited to your needs, please contact us.