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Revealed: 3 protection and insurance myths

Category: News

Insurance and protection plans have always been a vital part of any long-term financial plan. The unexpected can happen at any time, as the last year and a half has demonstrated. But knowing that you and your family are protected can give you peace of mind and financial security at an already difficult time.

Protection and insurance policies are important but there are myths associated with them too. Keep reading for a closer look at three of these, and to find out why we at Fingerprint are convinced they are untrue.

Myth #1: My provider will avoid paying out

Arguably the biggest myth surrounding protection plans – and the simplest to disprove – is that companies will do all they can to avoid paying out on claims.

The Association of British Insurers (ABI) confirmed just last year, that 98.3% of protection claims were paid out in 2019, at a cost to insurers of £5.7 billion.

Of the 1.7% that didn’t pay out, the most common reason was non-disclosure. While omitting some information might lower your premium, it could also invalidate your policy.

At Fingerprint, we can use our experience and independent status to scour the market for the right policy for you and help to make sure the information you provide is relevant and correct.

Relevant information might include:

  • That you are awaiting test results
  • That you are or have been a social smoker
  • The amount of alcohol you drink (even if you are unsure).

When Aviva surveyed the expectations of customers, respondents estimated that claims paid out successfully only 52% of the time. A similar number of respondents (55%) thought that insurers would look to avoid paying out.

While this myth is untrue, it is also crucial that you supply all the relevant information, so get in touch before choosing a policy and we can help to decide if it’s right for you.

Myth #2: Protection and insurance is too expensive

While it’s true that there is no “average” cost for protection, that doesn’t mean it needs to be expensive. The cost depends largely on the type of cover you need, and what is right – and affordable – for you.

You’ll need to think about your circumstances. If you are the main breadwinner of the house, what would happen if an accident or illness prevented you from working? Would you still be able to pay the rent or mortgage?

If you are contemplating life cover, think about the size of your mortgage or the cost of your child’s schooling and consider putting a sum in place that is large enough to pay off these commitments so that your loved ones won’t have to.

Cover can start from less than £10 a month but the most important thing is choosing the right policy for you.

Myth #3: It won’t happen to me

While none of us likes to contemplate our own mortality, assuming that the worst won’t happen to you or your family could leave you financially vulnerable if it does.

Take our quiz to debunk some of the myths around the likelihood of getting ill and then keep reading for some information on the products that could help.

Income protection

Income protection will pay a part of your normal income if you are unable to work due to an accident or illness. You’ll normally receive a percentage of your full wage, helping you to pay household bills and giving you peace of mind.

Critical illness cover

Critical illness cover will provide a one-off payment if you are unable to work due to illness.

The cover pays out a lump sum if you are diagnosed with certain conditions listed on the policy such as a heart attack, stroke, or certain cancers. Conditions such as multiple sclerosis and Alzheimer’s disease might also be included.

You can use the money as you see fit, to pay bills or to cover medical expenses or house modifications if your illness requires it.

Life insurance

Life insurance pays out a sum assured on death but there are many different types so be sure to speak to us before you take out a plan.

Some products will only pay out on death within a specified term while others might guarantee to pay out on death whenever it occurs, but this could be more expensive.

Get in touch

Fingerprint’s team of expert financial planners can help you protect you and your family, whatever the future brings.

If you would like the peace of mind that comes from knowing you are protected, get in touch by emailing hello@fingerprintfp.co.uk or call 03452 100 100.

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