Financial protection: The key options that could protect your lifestyle and family

May 02, 2025

Financial protection could provide you with a cash boost when you need it most, and there’s more than one type to consider.

Last month, you read why financial protection provides a crucial safety net should you face an unexpected shock. Now, read on to find out more about some of the key options.

2 forms of financial protection that could plug an income gap

Your income suddenly stopping is likely to have an immediate effect on your short-term finances. In addition, it may harm your long-term plans too. For example, you might halt pension contributions or dip into a savings account you’d earmarked for another goal.

If an illness or accident means you can’t work, two types of financial protection could be valuable.

1. Income protection

Income protection would pay you a regular income if you were unable to work due to an accident or illness. The income it provides would continue until you return to work, retire, or the term ends.

So, if you can’t work, it could take a weight off your mind and allow you to focus on recovering.

Usually, income protection would pay a proportion of your usual salary, such as 60%. According to figures published in September 2024 by the Association of British Insurers (ABI), in 2023, more than £177 million was claimed through individual income protection. The average successful claimant received £22,270.

2. Critical illness cover

Critical illness cover would pay out a lump sum if you’re diagnosed with a covered critical illness. This cash injection might allow you to take an extended period off work while remaining financially secure.

The ABI figures show the average person who made a successful critical illness claim in 2023 benefited from a £68,354 lump sum.

You should note that critical illness cover will not pay out for every diagnosis. It’s important to check how comprehensive your cover would be and understand what would be excluded.

You can combine types of financial protection

As income protection and critical illness cover pay out in different circumstances, it may be beneficial to consider whether both options could be right for you.

2 types of financial protection that could support your family if you pass away

Thinking about passing away is difficult, especially if you have dependants. Yet, taking steps to ensure their financial security could make a huge difference in their life should the worst happen.

Here are two types of protection that could improve the financial security of your family.

1. Life insurance

Life insurance would pay out a lump sum to your beneficiaries if you pass away during the term. The money can be used however your beneficiary chooses, such as reducing debt, paying school fees, or covering household bills.

However, according to a Which? report, 39% of parents don’t have life insurance. This oversight could potentially leave your family in a vulnerable position if they rely on your income.

When assessing whether life insurance could be appropriate for your family, you might want to consider how their lifestyle would change if you passed away. For example, if you’re the primary caregiver to young children, would your partner need to reduce their working hours? If so, life insurance may enable them to do so without worrying about money.

On average, ABI figures show life insurance paid out £80,403 in 2023.

2. Family income benefit

If your loved ones may struggle to manage a lump sum or they would prefer a regular income they can rely on, family income benefit might be more suited to your needs.

Rather than a one-off payment, family income benefit would pay out a regular amount for a defined period if you passed away during the term. You might choose for the income to continue for a set number of years or tie it to a milestone, such as when your youngest child turns 18.

You can take out both life insurance and family income benefit

Again, depending on your family’s circumstances, you might choose to take out both life insurance and family income benefit. This combination could provide your loved ones with an immediate cash injection and a long-term income stream.

For instance, you may choose to take out life insurance to pay off debts, such as your mortgage. Then, family income benefit could provide enough to pay for day-to-day expenses until your children reach adulthood.

Get in touch to talk about creating a financial safety net

As part of a wider financial plan, we could help you create a financial safety net that considers your needs and concerns. Please get in touch to arrange a meeting with our team.

Next month, discover what you might consider when calculating the level of cover you need when taking out appropriate financial protection.

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

What our clients say

The people we help are at the heart of what we do. Here are some of their testimonials.

I would highly recommend Darius and John. I’ve used a financial adviser previously and could never get in contact with them when I needed their help. Stratton Wealth Management have been excellent from the start. They are always available to talk, and they also don’t talk in financial jargon!

Dave Rigby -

A client since 2015

Having recently transferred my financial management to Stratton Wealth Management, I have been extremely impressed with the highly professional service I have received. I feel I have been fully involved in all decision making, and the company's highly skilled advisers have shown commitment and patience in any dealings I have had with them. I have also always found them to be easily accessible for any discussion I may require.

Denise Thornton -

A client since 2019

As a business owner and father of four children, finances are usually the last thing we think about. Stratton oversees and manages our finances, both in terms of advice for my business and our personal investments. It is comforting to know that our retirement, investment and life insurance planning has been taken care of. Darius and John are always so efficient in dealing with our affairs. As someone with no real understanding of the ins and outs, it has been fantastic to have experts giving us great advice and making sure our best interests are always the top priority.

Lee and Claire Parkinson -

Clients since 2016

Darius deals with my family’s finances and is a very trusted adviser. We meet a number of times a year, but I know I can call him any time if I have any questions. He is proactive, helpful and friendly!

Jonathan Dennis -

A client since 2019

I knew I needed to begin saving and planning for the future but didn’t know where to start. Stratton helped me to understand my finances and put together a savings plan that is affordable and works for me. I now have and an ISA and a pension, and whilst retirement is many years away, I have the peace of mind that I am saving for my future. I look forward to working with them for many years to come.

Martin Corrigan -

A client since 2016

I have been impressed with the advice and service provided by Stratton Wealth Management and have always found Darius to be approachable, dependable and highly professional in his approach. It is reassuring to be able to have such a high level of confidence and trust when it comes to financial advice.

Russell Jones -

A client since 2018

Many thanks indeed for your in depth report for my client Mrs H – it is most thorough and above all readable. This might sound particularly strange; however you may well gather that in my profession we see many such reports, and I often feel that if the adviser fills it with charts and graphs it evidences a level of research. In truth most of what is produced is readily obtainable from the internet.

I would like to thank you (and your organisation) for your prompt and professional attention to my requirements on behalf of my client. As a practice we shall definitely be putting Stratton Wealth Management on our “preferred supplier list".

Colin Dunstall, Donaldson Dunstall Solicitors -

A client since 2015

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