Even if your budget is limited keeping life cover should be a priority.

Everyone is looking at their budget in these hard times. People are going through all their direct debits and standing orders and seeing what they can afford to cut to save some pennies. It is with some irony then that at these times of hardship one of the first things to go is Life Insurance.

As a qualified financial advisor, I quite often wonder how people prioritise various aspects of their financial situation. It is very amusing to see that people consider Cable and Sky TV to be an essential expense, and for some bizarre reason life insurance is not. It is for this reason and the fact that I have a lot of clients at least seeking advice before making cutbacks that I feel this article is worth writing.

A story was related to me once about a man who had a fatal car crash while returning home from work one evening. The car he was driving was a complete write-off and so subject to a full insurance claim. A few weeks later two insurance men walked up the widows driveway with two cheques, one for 20,000 and the one for 25,000. The cheque of greater value was not for the deceased life insurance policy but for his motor insurance.

The question to be asked here is, with these two cheques, what do you suppose the widow is in a position to replace first, the support given by her husband or his flash car? Sad but true. What I am trying to get across is that we have become, as a nation, more preoccupied by the value of our things that we are undervaluing ourselves. This is particularly evident now when cash flow is a pressing issue for everyone.

So you are looking at your income and outgoings and you’re wondering “do I really need to spend this money every month on life insurance?” Well in my opinion it is simple, if it was worth buying in the first place then it is more than worth keeping now. In fact you will probably need it more. If times are hard for your family right now with your income coming in, imagine for a second what it would be like if you were not here and you family did not have the benefit of your income. I tell you now times will be a lot harder and the luxuries of the likes of Cable TV and Sky TV will then be the first things to go.

Now this article is not meant to be scaring anyone into keeping on your life insurance payments. Scaremongering is not part of my business. What happens to you and your family is of little concern to the likes of me. What I do know, however, is that as a professional financial advisor, I deal with bereaved relatives on a day to day basis. Some of the deceased have life insurance, often not much, and some have none at all. What they all have in common is that they all say they wish they had planned better for the tragedy that has befallen them.

The fact is I would have made them sort it, but I can’t deal with everyone, however much I would like to, so hopefully someone will read this and take some note and make sure they are protected for the worst.

One thing I would definitely urge is that if you are finding money tight, which of course the majority of us are in the present climate, and you are considering doing away with your life insurance in order to free up some extra cash, please do one thing and consult your financial advisor before taking any drastic action. You may not know that if you have had any health issues since originally taking out the plan and you then stop the plan, you may not be able to restart the insurance plan in the future. You could even consider the possibility of transferring to a cheaper plan. It may not give the same amount of protection as before, but it may save you a bit of money in the meantime, and at least you will be partially protected, which is the important thing after all.