Seeing your investments and savings grow is one of the more uplifting parts of financial management. This can make it very tempting to focus more of your attention here and not on some of the seemingly less attractive elements.
However, protecting your wealth is just as important as accruing it. Life can be unpredictable, and the right cover can reassure you that if the unexpected does happen, your hard-earned wealth won’t disappear.
It can also give you peace of mind that your loved ones and dependants would be looked after if you’re not around.
Read on to find out three key reasons you need to start thinking about protection as well as profit, and how the two work in tandem.
Protecting your wealth is just as important as growth, reassuring you during difficult times
It could be easy to think that wealth management is exclusively about constant growth. But in fact, financial planning brings together different elements to create your bespoke strategy.
This means considering:
- Income
- Savings
- Investments
- Goals and dreams
- Current life circumstances
Underpinning all of this is protection, making sure that the wealth you create and accumulate is guarded, helping your goals and dreams stay on track, whatever life throws your way.
Life has a habit of throwing curveballs. Some of these we can plan for when we work with you on your financial plan. Others we can’t. But what we can do is help you put the right protection in place, so if something unexpected does crop up, your hard-earned wealth could be preserved.
One of the key reasons many people choose not to take out protection is that they assume it won’t pay out. However, according to the Association of British Insurers, 97.4% of all protection claims were paid in 2024, totalling a record £7.34 billion.
There are three key areas of protection to consider
1. Income protection to support you if you can’t work for a while
Your earnings are the foundation of your finances, enabling you to make your initial savings and investments. If your income stops for any reason, it can have a domino effect, with short-term pauses disrupting long-term plans. Temporary loss of income could also mean you need to withdraw from your accumulated wealth to pay bills and cover expenses.
If you’re unable to work due to illness or injury, income protection insurance usually covers a percentage of your earnings, typically between 50% and 70%. You’ll receive this as a regular income until you’re able to return to work.
This can be a reassuring form of cover to have in place, especially if you don’t have a generous employer’s sick pay policy or you’re self-employed.
2. Critical illness cover to reduce financial pressures if you are diagnosed with a serious condition
Being told you have a critical illness is hard, and this type of cover can give you some peace of mind that you won’t need to worry about your finances while focusing on your health.
It usually pays out a tax-free lump sum when you’re diagnosed with a specific condition listed in your policy.
You can use this to replace lost income, fund necessary treatment, or cover major expenses such as your mortgage. Unlike income protection, it’s a one-off financial buffer, and the two can often work in tandem.
While there are support systems in place, these are unlikely to offer you enough to cover your bills and expenses. UK Statutory Sick Pay is currently £123.25, paid by your employer for up to 28 weeks.
3. Life insurance to look after your loved ones when you’re gone
This type of protection pays a lump sum to your chosen beneficiaries on your death, so your dependants will be looked after when you’re no longer there. The payout can also be used to clear outstanding debts, pay off a mortgage, or replace lost income.
It is also a way of giving your loved ones immediate access to funds, provided you write it into a trust. This can be particularly important if your estate is liable for Inheritance Tax (IHT), which must be paid at the end of the sixth month after your death.
Writing life insurance into trust means that these funds won’t be included in your estate for IHT purposes. The money is paid directly to trustees, so it remains outside your estate. However, this can be complex and is always best done with the help of a financial planner. Please speak to us if this is something you’d like to find out more about.
Read our article about business-specific protection, ‘Why key person insurance could help you keep operating’, for more information.
Get in touch
The right cover is highly bespoke, working to protect your wealth in a way that aligns with your circumstances. If you’d like to find out more, please email us at info@servoprivatewealth.com or call 01444 715200.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Note that life insurance and 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.
Any links will direct to a third-party website and Servo Private Wealth is not responsible for the accuracy of the information or content contained within linked sites.
Approved by Best Practice IFA Group Limited on 13/05/2026.