The financial impact of Covid – act now to protect your loved ones

The UK has now been in the midst of the pandemic for over 10 months and while good progress is being made with the vaccination programme, an official end to the third lockdown may still be some way off. Last week, the country passed the tragic milestone of 100,000 deaths from Coronavirus, with stark warnings this figure will continue to rise. Obviously the safety and health of loved ones is everyone’s primary concern during this difficult time, however it is inevitable that financial concerns after such a prolonged period of hardship continue to cause stress. Gary Smith, chartered financial planner at Tilney, looks at why protecting your life and business have never been so important.

“We are fast approaching the one-year anniversary of Covid affecting all our lives in the UK. While we know a lot more than we did back in March last year, there are still so many unknowns. For example, we now know that for some the effects of having coronavirus can be a long-lasting, debilitating condition called ‘long Covid’. This means that even those who are not the most desperately ill with the virus can still be feeling significant adverse effects months later which could impact their ability to work. Similarly, the continued strain on the NHS has pushed back many routine treatments and operations which could also have an impact on your ability to work. Hence the need for financial protection.

“Having financial protection, such as life assurance and critical illness cover, in place will help ease your mind during an already incredibly stressful time. For example, a life assurance policy will ensure your family is provided for in the event of your death. Similarly, critical illness cover would help to ease the financial burden in the event of a severe illness or injury preventing you from working. While it is always hoped that that claims on such policies will never been needed, they are there to insure against things like the family home being lost and ensure your loved ones are provided for, when you cannot provide for them yourself.

“We also do not know yet with any clarity how long this period of financial uncertainty will last. Currently, we aren’t seeing insurance companies applying a Covid premium, so it might be worth reviewing your life cover and critical illness cover in case costs increase in the future.

“Protecting your income and the financial well-being of your dependents is obviously of the utmost importance. However for business owners it is equally important to protect their livelihoods with business protection. This will help ensure the real value of their company passes to their intended beneficiaries, and can ensure the continuity of a business in the event that the owner or their business partner/s are no longer around.

“Now is the time to start asking yourself, your business partner and your loved ones some important questions. For example, would your business partner or family really want to run the business after you’re gone? Do you want to run the business with your business partner’s spouse if they die? Have you taken out business loans? Is the company really worth as much, if you’re no longer around to run it? It can be unsettling to be having such frank conversations against the current economic backdrop, but having a plan in place, with the correct business protection could prove invaluable.

“The pandemic is not yet over, and there is still considerable uncertainty about the long-term economic impact. But by putting some income and business protection in place, you can give yourself just a small bit of peace of mind.

“As always, with regards to both financial and business protection, please speak to a financial planner about the various options available to you for your specific circumstances.”