Ways To Prioritise Protection Needs

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by: James Copper
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Word Count: 450
Date: Wed, 9 Nov 2011 Time: 4:01 AM
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There is no doubt that the idea of protecting oneself against financial hardship in the event of death, critical illness, accident, sickness or unemployment is a good idea in principle - especially when there are children involved or a dependent spouse.

For whatever reason however, many of us still do not see fit to arrange protection policies in relation to both protecting their income, their mortgage repayments or even the outstanding balance of their mortgage of loan. Whether this is because it is felt that such policies are unaffordable or that they are a waste of money, or even because the individual adopts a 'it won't happen to me' style attitude - There are of course many different reasons.

It is important to firstly ascertain what protection cover is needed, if any, and in what area(s). Where protection cover is required, it is important to prioritise the protection needs where there is a tight budget. In terms of assessing the importance of protection cover, it is a widely regarded that the importance of protecting current and future income levels should be of the highest priority.

One common method of listing individual financial needs is to rank them in order as follows

- The protection of dependents from the financial effects either of a loss of income or of the need to meet extra outgoings in the event of premature death.
- The protection of self and dependents from the financial effects of losing the ability to earn an income in the long term
- The protection of income for a time later in life when the client either does not want to work or expects to be incapable of doing so (Retirement planning)
- The increase andor protections of the value of money saved or invested and the desire to increase income from savings andor investments, either now or in the future, or to build up some savings in the first place.

The latter two points listed are specific plans for the future rather than the current safeguarding of current and future income. The clear overriding consideration as stated is to ensure that what you currently have in place is going to adequately protect you rather than looking too far into the future.

Most borrowers will be able to relate to mortgage protection is some form or another. It is vitally important that a mortgage, as a debt, should be fully protected. There will need to be suitable funds to repay a mortgage debt, either through paying the mortgage on a Capital Repayment basis or through the use of a savings or investment plan.

About the Author

James Copper writes for Any-Loans.co.uk where you can find the best debt management services to help you deal with your debt problems