Protecting against the unexpected

Now more than ever, we all want to feel confident that we can, protect ourselves and our families better against uncertainties in the future. 

When planning for potential life events, our physical health and our financial wellbeing can often be closely connected in a number of ways. By taking care of one, we can also make a positive impact on the other.

Throughout 2020, we have seen a significant increase in demand for insurance products and other protection needs. In addition, people have become more interested in the detail of their insurance policies, with a focus on choosing products with a level of cover that protects against a wider variety of eventualities.

Typically, most people first start to seriously consider life insurance when they become parents. Having children makes us think about the more distant future, and we all want to ensure that our loved ones are provided for no matter what may happen.

However, there are also other circumstances in which personal protection products can offer peace of mind, particularly as we come to terms with a different reality. One significant change over the past year has been the increased need of self-employed people to protect their income. In many cases, these individuals will not have access to the same benefits as those provided by a full-time employer, such as critical illness cover or death in service.

Life insurance comes in a number of forms, but the most popular are level term and decreasing insurance.

A level term insurance policy runs for a set amount of time – for example ten, twenty or thirty years. The sum assured remains the same throughout the lifetime of the policy.

A decreasing insurance policy is similar, but the payout gradually reduces over the term. This gradual reduction is usually linked to a mortgage repayment schedule, in which the amount also decreases over time.

Many life insurance policies are also complemented by ‘living benefits’, which offers protection against risks other than death. The most common of these is critical illness cover, which pays out the assured sum in the event that the policy holder is diagnosed with a serious condition or illness.

Another policy worth looking out for is permanent total and partial disability benefit, which pays out the assured sum if the holder suffers a permanent total or partial disability due to an accident or serious illness.

The idea behind these additional forms of insurance is to cater for a wider variety of scenarios which could result in the policy holder no longer being in a position to earn an income. In these events, the life policy would provide financial relief in the form of the assured sum.

Insurance companies and financial planning advisers can help one decide which products are best suited depending on personal needs and circumstances. Advisers play an important role in helping customers from all walks of life to understand the need for and benefits of individual protection.

It takes careful planning to choose the right life protection cover. It is also important to regularly review your life protection cover needs to make sure that they are evolving in line with your personal and economic circumstances.

If you would like to speak to one of our dedicated financial planning advisors about your protection needs, or any other goals or concerns you may have, you can call us on (+356) 2380 2380, or complete our online contact form to request an appointment.

Premier customers can reach out directly to their relationship manager.

This article was written by Muriel Rutland, CEO of HSBC Life Assurance (Malta) Limited. It first appeared in The Times of Malta on 25 September 2020.