Brits race to buy protection as war fears grow – here’s how to take cover | Personal Finance | Finance

Closer to home, there are fears about theft, fraud, online crime and even civil unrest. Most of these are out of our control. But one area where we can take action is insurance. Although specialist cover is available for cybercrime and even terrorism and war risks, it is too specialized and expensive for most of us. What we can do is make sure the basics are covered. While travel insurance protects our holidays, buildings and their contents protect our homes and belongings.

Insurers say the wider sense of uncertainty is also driving demand for protection such as life insurance, income protection and critical illness cover, with households racing to secure themselves and their families should the worst-case scenario occur. Nearly half of us feel less safe than we did a decade ago, according to National Friendly research. Concerns have increased in recent weeks; The percentage of those considering purchasing protection increased from 28% in February to 41%.

National Amity chief executive Graham Singleton said concern had triggered action and hedge sales. “Life, income protection and critical illness insurance can protect families financially and be more affordable than people think.”

Income protection replaces your earnings if illness prevents you from working. It is sometimes confused with payment protection insurance, or PPI, a lesser type of cover that is scandalously mis-sold by banks. Income protection is much more respectable. It is sold by specialist insurers such as Aviva, Aegon, Legal & General, LV=, Royal London, Scottish Widows, Vitality and Zurich, usually through brokers after taking advice. Alternatively, critical illness insurance pays you a tax-free lump sum if you’re diagnosed with a serious condition such as cancer, heart attack or stroke.

The cost of an income protection policy paying £35,000 a year tax-free usually costs between £30 and £60 a month at age 40, rising to between £40 and £70 at age 50. Premiums vary depending on factors such as your job, health condition and policy terms. A total £100,000 life and critical illness policy starts at around £50 a month for a 40-year-old man, rising to around £100 at age 50. In any case, smokers can expect to pay roughly double as they are more likely to claim it.

Although life insurance is better known than income protection or critical illness, people are more likely to claim the latter two. This is because while life expectancy is increasing, so-called “healthy life expectancy” is decreasing and more people in their 50s and 60s are becoming seriously ill. In the poorest areas, people now only stay healthy until age 50, while in the richest areas the rate is almost 70.

Sarah Coles, head of personal finance at AJ Bell, said this trend presented a growing challenge. “People are living longer but spending most of their lives in poor health. Can your finances meet the challenge?” Planning ahead is very important. “This could mean building a larger emergency savings pot to cover additional costs, increasing retirement contributions or safeguarding more of your money for later life. This is a huge challenge given the costs.”

Not everyone will reach state pension age in good health, where income protection and critical illness cover can prove their value. Many are still holding out, said Charles Hart, consultant at LionHart Mortgages & Protection. “I’ve seen all the excuses, including ‘I’m vegan so I don’t get sick’, ‘I do yoga regularly’ and the time-honored classic ‘This won’t happen to me’. The last one came from a builder whose colleague was hit by a forklift the week before.”

Insurance is another monthly cost when budgets are tight. But it’s worth asking: What if it really happened to me?