Thursday's Poll Results: You're Not Protected

The results were as follows:
59% No
41% Yes

Today’s result illustrates starkly how financially unprepared many people are to meet adversity in its multiple guises. It is after all, an uncertain world. As Benjamin Franklin put it, “all that is certain in life is death and taxes.”

Of course, the former may be a certainty but the problem is not “if” but “when”. From the Poll results it appears that we are failing even to protect our nearest and dearest against the ultimate uncertainty of when we die! The Poll question is purposely broad and, given that almost two thirds of respondents have indicated that they don’t protect against unforeseen events, one is left to surmise that this lack of action includes not just life cover, but also ill-health, loss of employment and any other misfortune that might have an adverse financial impact.

As Mark Taylor CFP of Platinum Portfolios Ltd commented , “It is perhaps down to ‘human nature’ that many of us prefer not to think about certain issues rather than take action to address them. The poll result supports this. I recall a conversation with a new client who believed that making a Will was somehow tempting fate! Without doubt, people do feel better when they take action to address an uncertain situation; this is hardly surprising as they are in control of events, rather than the other way round.

Unfortunately, life does have a habit of throwing the odd “curved ball” and this tends to be when we least expect it. Planning, in any context, helps prepare for this and makes it more likely that we will achieve the things we want.”

Jane Wheeler CFP, of Direction Financial Planning in Taunton highlighted the different planning issues facing single people, who only need to consider their own circumstances and those with family dependents who also need to consider the impact on others.

Highlighting the importance of planning, Jane advised, “Make sure that you understand the benefits that would be payable by an employer or the State. Subtract that from the total cover you or the family would need, to find out what insurance cover you need to provide yourself. Take the time to research on the internet to find out the cheapest rates. Remember that health, medical history and smoker status will affect the cost”.

David Crozier CFP, of Navigator Financial Planning in Northern Ireland, also stressed the importance of planning, “Living in an uncertain world does leave one with a certain sense of vulnerability, of being subject to the vagaries of outside influences, of not being in control. The temptation is, therefore, to leave it all to fate and abdicate responsibility for one’s financial failure (or financial success).

No-one can predict the future with any degree of accuracy, but a financial planner, using the tools available at his or her disposal, can help highlight vulnerabilities in a person’s financial situation. Once the likely problem areas are identified, strategies can be suggested to reduce the chance of disaster. Working together, client and planner can bring back control into the client’s own hands, restoring a sense of purpose and direction, and not leaving the client like an ostrich – with head in the sand!”

Danny Cox CFP, Director of Advice at Hargreaves Lansdown contemplated the reasons that might lie behind the results, recalling a Poll carried out by his office into peoples’ “10 least favourite spending items” in which “insurance” came out near the top along with tax, parking tickets and speeding fines! As Danny observed, “The problem with insurance is that it will always feel like a waste of money until you need to claim. There is no getting away from that. Insurance is often the item that underpins your financial well being, whether it be protecting your family from unemployment, flood, theft, illness or even death.

If money for insurance premiums is tight, I believe that it is best to protect those situations which would have the greatest impact on your situation. With careful shopping around and planning this might not cost as much as you think.”

So, the inevitable conclusion is that for too many people insurance is still seen as an “unnecessary evil”. There is therefore a clear challenge for advisers, planners and the media to help change these perceptions and behaviours. David Crozier expressed the reality succinctly, “I am currently dealing with a 49 year old lady with a malignant brain tumour and the widow of a man who died of a heart attack while on holiday in Spain. What do you think those people are thinking about now: the premiums they've paid or the financial bail-out they are about to receive?"

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