When it comes to protecting your assets, most people think about their home, car, or retirement savings. However, the most important asset you have isn’t your property or investments—it’s yourself.
While it’s standard to secure insurance for your car, home, and even a vacation, many of us fail to protect our most valuable asset: our ability to earn an income. Yet, this is crucial, especially when you consider how much you stand to earn over a lifetime.
The Value of Your Earning Potential
Let’s break it down: the average UK salary is £27,000 per year. If we account for inflation over the course of a 50-year career, this amounts to lifetime earnings of over £2.2 million. For those earning more—say £50,000 or £60,000 annually—your lifetime earnings could easily approach £5 million. This makes your income the most valuable asset you have, and yet, it’s often left unprotected.
Why Life Insurance Matters
Let’s face some uncomfortable truths: life is unpredictable, and your health can change in an instant. Research shows that one in two people will be diagnosed with cancer at some point in their lives. For those diagnosed, 64% will be under the age of 75. This brings a stark reality into focus when planning your financial future.
According to data from the Institute and Faculty of Actuaries, a study on mortality and illness risks in the UK, the numbers are sobering. For a couple in their 30s, the risks are significant:
- There’s a 59% chance that one of them will have to take more than two months off work due to illness.
- There’s a 27% chance of facing a serious illness that could be long-term or debilitating.
- There’s a 9% chance that one of them will die prematurely.
- Overall, there’s a 67% chance that any of these scenarios will happen.
These statistics show that life and health challenges are far more common than many people realize, and having the right insurance coverage is a crucial part of any financial plan. Life insurance, income protection, and critical illness insurance are just as important as contributing to your pension.
Workplace Coverage Isn’t Enough
Many individuals assume that their workplace death-in-service policy will cover their mortgage and provide sufficient financial support for their family. However, it’s essential to ask: will this coverage fully replace the income you would have contributed to the household? Additionally, corporate income protection typically only covers a portion of your net income—often just 50-60%. If you were to fall ill, how would you continue to fund your pension or other long-term financial goals?
These are important questions to address when planning for your financial future. You need to carefully assess your goals and the risks you face, then choose the right combination of policies to ensure minimal financial disruption should something go wrong.
Protecting Your Most Valuable Asset
At the end of the day, you are your most valuable asset. If not you, then someone else in your family might be. It’s crucial to protect your ability to earn and provide for your loved ones. Don’t wait for an unfortunate event to expose gaps in your coverage—take action now to safeguard your income and secure your family’s future.
