How can I financially plan for the future?
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Matthew Beck, Chartered Financial Planner at Smith & Pinching, explores financial protection, mortgaging and lifetime cashflow planning.
We’ve just put our house on the market and hope to move before the end of the year. We’ve talked to a mortgage broker about what we can afford to borrow but I’m nervous about our situation if anything happens to me or my wife in the future that has an impact on our earnings. It’s not just the mortgage – I know that we can have some kind of repayment insurance in case we’re ill, have an accident or die – but everything else. We have two children, both of whom are likely to want to go to university in a few years and we’re going to need to plan for that. What do you suggest?
Matthew Beck of Smith & Pinching responds:
Financial protection is one of those areas that many people tend to overlook. Most of us have some kind of payment protection as part of our mortgages but you are right that such protection is relatively narrow and won’t cover all bases.
There are different types of protection that will help you and your family in the event of disaster. What you might need will depend on a range of different factors.
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First, you may have a number of benefits and cover as part of yours or your wife’s workplace benefits package. These may include life insurance and private healthcare, for example, as well as some kind of critical illness cover and income protection.
All of these elements will give you support in times of need. If they are provided as part of a workplace package then you may not need to take out further cover. However, if there is nothing – or insufficient cover, you may need to make other arrangements.
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Other factors to take into account will include your likely future home purchases, your savings and investments and your projected spending at different points in your life – including those university fees, of course.
As independent financial advisers, we have a really useful tool to help determine points of vulnerability by looking at projections of what your financial situation might be at different stages in your lives under a variety of scenarios.
This is called lifetime cashflow planning and will help to clarify your thinking so that you can plan accordingly. In an ideal world, you would have every different type of cover in place, but in the real world it is often a case of balancing the cost against the benefits.
A full protection review with an independent financial adviser will help you achieve that balance and, with it, the peace of mind you need.
This is a marketing communication: any opinions expressed in this article do not constitute advice.