A CRIF study found that in 2024, nearly a quarter of Brits (24%) either currently held or had previously held pet insurance. Meanwhile, less than a third of UK consumers (31%) had life insurance.
This meant that UK consumers were the most likely to insure their pets across Europe and the US, yet the least likely to insure themselves.
While it is important to protect your pets, it’s also vital to do the same for yourself and your family.
UK consumers underestimate the value of protection
In the UK, consumers’ attitudes towards protection are worsening. According to a 2024 study from the FCA, UK life insurance rates have dipped to 28%, with critical illness cover lagging even further behind at 13%.
There are various reasons why UK consumers are less inclined to invest in protection. For example, FT Adviser reports that many refuse life insurance because of a psychology of avoidance built up around the product. This is because some find the implications of life insurance morbid and would rather dismiss or avoid the topic entirely.
Products like critical illness cover are commonly overlooked due to individuals underestimating their likelihood of falling ill.
Others may neglect protection because of the complexity of navigating claims, a lack of trust in providers, and the belief that coverage offers poor value for money.
While it is easy to be sceptical about protection, there are many benefits to having cover in place.
Life insurance offers your family a layer of financial protection after you pass away
Life cover ensures that your family can stay financially stable by providing a lump sum at the time of your death.
These funds can pay for their short-term bills, household costs, and your funeral arrangements. They can also provide long-term security by bridging the gap left by your income and ensuring they can fulfil their retirement planning objectives.
The lump sum from a life insurance payout is free from Income Tax and Capital Gains Tax (CGT). However, depending on the value of your estate, the funds may be liable for Inheritance Tax (IHT).
You can mitigate the effects of IHT on life insurance by placing it into a trust, which may separate it from your estate and reduce the tax liability. That said, trust rules can be complex, so it is recommended that you seek professional advice before making any decisions.
Income protection can help you meet financial obligations if you are unable to work
If an injury or illness keeps you out of work, this can significantly impact your income. Being unable to work for a long time could put significant financial strain on you and your family.
Income protection helps to mitigate the effects of this loss of income, providing regular payments calculated as a percentage of your salary.
These regular payments can help cover your financial obligations until you return to work, retire, or pass away. This ensures your family receives steady financial support and gives you time to focus on recovery.
Income protection can pay for costs like day-to-day bills, mortgage repayments, and utilities. It may also help to keep your long-term financial plan on track, as you can still save and invest for the future.
Income protection covers most injuries and ailments that leave you unable to work, including physical and mental health problems. This means that if you suffer from burnout or mental health issues like anxiety, depression, or stress that force you out of work, your protection might pay your bills while you recuperate.
However, the conditions covered vary between providers, so it is important to research your coverage before purchasing.
Critical illness cover can protect your long-term financial goals
If you suffer a more serious injury or illness, you might need a large sum of money quickly to cover the cost of care or treatment.
If you do not have immediate access to substantial cash savings, you may need to sell off assets, using wealth you had earmarked for retirement.
Similar to life insurance, critical illness cover pays you a lump sum should you become incapacitated by illness or accident. This helps to cover costs without negatively affecting your long-term financial goals. This can include expenses relating to treatment or funding for accessibility equipment.
Income protection and critical illness cover are often used together to provide comprehensive financial support and protect you and your family against a broad range of possible eventualities.
Personal protection can give you peace of mind
While protection mostly offers long-term rewards, putting a plan in place today offers you a crucial short-term benefit: peace of mind.
Likewise, it can save you from the unnecessary mental strain of reorganising your finances in response to a work-preventing illness, when you should be focused on treatment and recovery.
This means that, rather than agonising over an uncertain future, you can rest comfortably knowing that you and your loved ones will be financially secure no matter what happens.
Get in touch
If you want to learn more about personal protection or need help deciding what coverage is best suited for you, a Milsted Langdon financial planner can give you tailored recommendations based on your circumstances, lifestyle, and goals.
Please get in touch or email us at advice@mlifa.co.uk for more information today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Note that life insurance and financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.