Does Life Insurance Matter?

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Taking out life insurance and critical illness cover can provide significant peace of mind and financial protection for you and your loved ones. These two types of insurance serve different purposes, but both play a crucial role in safeguarding against unforeseen circumstances. Then there’s income protection; It’s different from life insurance and critical illness cover because it provides ongoing monthly payments to replace part of your income while you're unable to work, rather than a lump sum payment.

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Life Insurance: Why It's Important

Life insurance provides financial support to your loved ones in the event of your death. If you have dependents—children, a spouse, or anyone relying on you for financial support—life insurance ensures they are not left struggling financially after your passing.

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Key Reasons to Take Out Life Insurance:

• Financial  Security for Your Family: The primary purpose of life insurance is to provide a lump sum payment to your beneficiaries upon your death.  This can be used to cover daily living expenses, pay off any outstanding debts (like a mortgage or car loan), and maintain your family’s standard of living.
• Mortgage  or Loan Protection: If you have a mortgage or other significant debts, life insurance can cover these liabilities, so your family doesn’t have to sell the home or take on additional debt. This is especially important if your partner or family members would struggle to pay off the mortgage without your income.
• Funeral  Expenses: Funerals can be expensive, often costing thousands of pounds. Life insurance can help cover these costs, relieving your loved ones from the financial burden during an already difficult time.
• Income  Replacement: If you’re the primary earner in your household, life insurance can replace the lost income your family would face after your death. It’s particularly vital if you have children or dependents who rely on your salary.
• Legacy or Charitable Giving: Life insurance can also be used to leave a legacy to your children or favourite charity. It ensures that your wealth is passed on according to your wishes without the burden of inheritance tax eating into the amount.

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Critical Illness Cover: Why It's Important

Critical illness cover provides a lump sum or regular income if you’re diagnosed with a serious illness such as cancer, heart attack, stroke, or other major medical conditions. It’s different from life insurance, as it covers you while you're still alive but facing a major health crisis.

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Key Reasons to Take Out Critical IllnessCover:

• Financial  Support During Recovery: If you're diagnosed with a critical illness, the financial impact can be significant. Critical illness cover can provide a lump sum that helps cover lost income, pay for treatment or private healthcare, and support your family during your recovery. This can also ease the stress of not being able to work while you focus on getting better.
   
  1. Example:  If you develop cancer and need to take time off work for treatment, the lump sum from critical illness cover can help cover your bills and living      expenses while you're unable to earn an income.
  
  
• Additional Healthcare Costs: While the NHS provides free healthcare in the UK, there may be additional costs associated with private treatments, therapies, or home care during recovery. Critical illness cover can help cover these additional expenses, providing you with the option of receiving private healthcare if needed.
• Debt  Repayment: If you're unable to work due to illness, critical illness cover can help ensure your debts (like credit cards, loans, or your mortgage) are paid off or reduced. This way, you can focus on recovery without worrying about your financial obligations.
• Peace  of Mind for Your Family: Knowing that critical illness cover is in place means your family can focus on supporting you emotionally and physically, rather than worrying about finances. This can make a huge difference in your overall wellbeing during a health crisis.
• Helps  Maintain Your Quality of Life: Critical illness cover can help maintain your lifestyle even if your income is reduced. This could include covering additional costs for childcare, home help, or adjustments to your home if needed due to your illness.

There are different types of life insurance and critical illness cover.  Team MFS will have an in-depth chat, possibly multiple chats, to ensure we find you the right cover for you – at the right cost.   There is no one size fits all cover so our team will take time to research what’s right for you.

Having both life insurance and critical illness cover provides comprehensive protection for you and your loved ones. It addresses both risks of death and serious illnesses.  Very simply life insurance provides financial protection in the event of a death. Critical illness covers gives you support if you suffer from a serious illness, the complement each other by covering different risks.  

When Should You Consider Life Insurance and Critical Illness Cover?

• If you have dependents (children, spouse, elderly relatives): They may rely on your income, and these policies ensure their financial stability.
• If you have a mortgage or loans: Life insurance can cover the mortgage, while critical illness cover can help with payments if you're unable to work due to illness.
• If you're the primary earner: Protecting your income is vital, especially if others depend on you financially.
• If you have a family history of serious illnesses: If critical illnesses like heart disease or cancer run in your family, critical illness cover can offer valuable protection.
• If you don’t have enough savings to cover long-term illness: Without critical illness cover, long-term illness can quickly drain savings, so this cover can be an important safety net.

 Income protection is another essential type of insurance that helps to safeguard your finances in case you're unable to work due to illness, injury, or even long-term disability. It’s different from life insurance and critical illness cover because it provides ongoing monthly payments to replace part of your income while you're unable to work, rather than a lump sum payment.

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‍Ongoing Income in Case You Can’t Work

‍The primary benefit of income protection is that it replaces a percentage of your regularincome (usually around 50-70%) if you become unable to work due toillness or injury. This helps cover your day-to-day living expenses, such as:

• Rent or mortgage payments
• Utility bills
• Groceries
• Car payments and other personal loans

Income protection can help ensure that you don’t have to drastically change your lifestyle or fall into financial hardship just because you’re unwell or injured and can’t work.

‍Coverage for a Wide Range of Illnesses and Injuries

‍Income protection covers a broad range of conditions that may prevent you from working, including:

• Physical injuries (e.g., broken bones, surgeries, long-term recovery from accidents).
• Mental health issues (e.g., depression, anxiety, stress, burnout).
• Chronic illnesses (e.g., cancer, heart disease, musculoskeletal problems).
• Long-term or temporary disabilities that leave you unable to perform your job.

This makesit a very versatile policy that protects you from both physical and mentalhealth issues that might affect your ability to earn an income.

‍Flexible Terms and Conditions‍

Income protection policies are often tailored to meet your specific needs, andyou can adjust aspects like:

• Waiting period: The length of time before your payments begin. Common waiting periods range from 4 weeks to 12 months. The longer the waiting period, the cheaper your policy.
• Benefit period: How long the insurance will pay you while you're off work. Some policies pay for a set number of years (e.g., up to age 60 or 65), while others may pay out for a limited time, such as 12 months or 2 years.
• Level  of cover: You can choose how much income you want to protect, usually between 50–70% of your normal earnings. The more     income you cover, the higher your premiums will be.

You can even opt for policies that only cover specific situations, like only covering you for accident-related injuries or illnesses that stop you from working for an extended period. While it might feel like a "just-in-case" purchase, life insurance, critical illness cover, and income protection are not just about preparing for the worst—they're about ensuring your family's security and giving you peace of mind. They allow you to focus on what matters most, whether it’s recovering from a serious illness, inability to work due to serious illness or ensuring your loved ones are financially protected after you’re gone.

Get in touch with Team MFS today to find out more about which insurances would suit you or to review what you currently have.

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The information contained within was correct at the time of publication but is subject to change. 06/02/2025

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