As we meander our way out of the pandemic towards a state of near normality, who'd have thought that we would fast forward straight into the path of yet another crisis that will cause us to question once again how can we protect our families?
This weeks news is of the ‘energy price crisis’, a global shortage of gas that has increased prices around the world. The headlines scream that, market highs will lead to some of the most expensive winter energy bills in the past 10 years and prices for millions of Britons are expected to rocket and drive half a million people into fuel poverty.
What does this mean?
Unfortunately, as the energy companies wrestle with the price surges, it means that some smaller suppliers will cease to exist and many more will be unable to offer competitive fixed priced deals.
Ofgem (the energy regulator) has alerted customers that due to gas prices increasing at an unprecedented rate that this will feed into all customer energy bills in the UK. Although at the moment prices are covered by the latest price cap, which means suppliers will only be allowed to increase prices by 12% for certain customers.
If you are on a fixed-price deal, when your contract ends you are likely to face a big increase as fixed-rate energy deals are becoming more expensive and you may struggle to get another deal quite as good as before. It has been reported that even the good deals are up to £800 more than they were last year.
The last 18 months have been tough for many households because of the health crisis, the impact that the pandemic has had on people’s livelihoods means that family finances could be tight now – especially if you are one of the third of all adults in the UK who have experienced a drop in their household income. Any increase could really upset the apple cart, particularly if you have little savings to fall back on – and it would be unthinkable to imagine what might come about if the worst should happen and your family only had one income to rely on, or even worse none!
What can you do?
Ofgem has encouraged customers to contact their supplier for support and switch to a better deal if possible – but most suppliers have withdrawn their deals because they simply can not afford to take on new customers, until supply issues are resolved. However, there are many conflicting opinions and no one knows exactly what is around the corner and advice seems to be to sit tight, watch out for deals and wait and see what happens.
This may work for a while, but if the health crisis has taught us anything it’s that sometimes the unthinkable can happen and what if it did and you are dealt with another financial blow, how would you or your family cope financially if they lost the salary of the main breadwinner?
Protection insurance such as life insurance and/or critical illness cover, or income protection are worth considering if you have any dependants who rely on you financially - to alleviate some of the financial stress of the situation if the worst should happen and to provide a cushion for any further financial shocks.
Critical illness cover and/or life insurance (you can get the two together) essentially do the same thing and can protect against a loss of an income. When someone takes out life insurance and dies during the duration of the policy, their chosen beneficiaries will receive a lump sum to support them and to maintain their standard of living if you are no longer around. Critical illness cover can help with similar financial issues but comes into effect if the policy holder is diagnosed with an illness from a list of critical illness conditions. Income protection insurance pays you an agreed regular income if you can't work because of sickness or disability and continues for a set period of time, usually until you return to paid work. Ultimately, protection insurance provides financial resilience for you and your family if the worst happens.
In different times, we may have thought about using savings to supplement a loss of income, but sadly many of us have seen savings diminish during the pandemic and now it seems household expenditure will be at a high in the short-term due to the energy crisis that is upon us.
We know it can be difficult to figure out whether life insurance, critical illness cover or income protection would work for you and your budget. That’s where our specialist advisors can help. We will assess your circumstances to work out exactly what type of insurance you need and provide you with options to suit your budget. To find out more why not give us a call on 0800 612 8005, we are here to help you protect the future of your loved ones.