INVESTMENTS | 5 MIN READ

The importance of financial protection

Written by Sally Dempsey
The importance of financial protection

Fear, worry, and stress are normal responses to perceived or real threats, and at times when we are faced with uncertainty or the unknown.

So it is normal and understandable that people are experiencing fear in the context of the COVID-19 pandemic.

The pandemic and the resulting economic impact has negatively affected many people’s mental health. Nearly half of UK adults (47%) have experienced mental health challenges during the pandemic, with millions battling with financial hardship, relationship stress and sleepless nights.

With this in mind we’ve put together some information about protection policies and how a mental health condition could affect their policy.

Life insurance or critical illness cover

New research reveals that only a small proportion of people notify their insurer of a mental health condition in the mistaken belief that it will affect their ability to take out life insurance or critical illness cover. This means they might not have adequate cover or access to support provided by their insurer.

Three in ten (30%) people report that they currently have a mental health condition or have experienced this previously. However, only four in ten 44% have informed their insurer.

There remains confusion around what can, or should, be said to an insurer when it comes to physical and mental health.

Ineligible for protection cover

Of those who did not disclose a mental health condition, nearly two-fifths (37%) thought their provider would only be interested in physical illness. Over a quarter (26%) felt it was personal and so would rather not share their condition with their provider. Almost one in five (18%) worried they would not qualify for a policy or would be charged more.

Contrary to these misconceptions, declaring a mental health condition does not necessarily mean higher premiums and it is unlikely to mean someone is ineligible for protection cover. Being open with an insurer means those with mental health conditions are more likely to receive the right support.

Getting the right support

Some people are confused about how mental health conditions affect their critical illness cover or life insurance, which prevents them from getting the right support. Insurers aren’t trying to catch people out – they are there to help.

The challenges of the last 20 months have highlighted the value of protection policies for families and individuals in difficult times.

Source data:
[1] Research carried out online by Opinium Research across a total of 2,002 UK adults (Booster sample of 502 self-employed workers and 1,015 Renters. Fieldwork was carried out between 21st – 27th October).

Whatever your thoughts, to ensure you take account of the full range of available options, we would always recommend you consider obtaining professional financial advice.

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This content is for your general information and use only, and is not intended to address your particular requirements. The content should not be relied upon in its entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of the content. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on the individual circumstances of the investor. The value of your investments can go down as well as up and you may get back less than you invested. All figures relate to the 2018/19 tax year, unless otherwise stated.

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