Thinking about the unthinkable

Every year millions of people are hurt financially by unforeseen health issues, demonstrating the importance of having protection in place.

There are not only emotional, but financial consequences from unexpected ill health, such as receiving a cancer diagnosis or a death within the family. And it’s a more common occurrence than you might expect. August 2017 research from Aviva* found nearly one in three of us have experienced long-term leave from work due to significant health reasons, of these people, 77% have seen their finances suffer consequently. The effects can be severe. Nearly a third saw their income drop by a quarter. On average, having to dip into savings and investments ate up 40% of people’s overall provisions. One in six had to take the more drastic step of downsizing their home or – in extreme cases – became homeless. Nearly two million people don’t think they’ll ever financially recover. No one ever knows what’s around the corner, and ill health can happen to anyone. But at what would already be an emotional time, experiencing financial concerns would only increase the stress and anxiety. That’s why it’s so important to have plans in place for the unexpected – and to keep making sure those provisions reflect any changes in your family’s circumstances.

Protect your future

The most obvious place to start is to have some form of protection in place. Income protection, for example, is a type of insurance that kicks in should your main source of income unexpectedly stop. If you were to have to take long-term leave due to illness or an accident – or even if you were made redundant – you’ll have a back-up source of income to cover your lifestyle. For many people, repaying a mortgage is the biggest monthly outgoing – and certainly the longest-lasting commitment. By arranging to have mortgage protection, your repayments can be covered, for a period, if something unexpected happens. This can give you time and breathing space in difficult circumstances, and reduce the risk of losing your home.

Emergency funds

In terms of your savings and investments, every financial adviser will highlight the importance of having emergency funds in place for unexpected events. It reduces the need to dip into your investments, which have been positioned for the long-term and might not be as accessible. With your pension, for example, there could be unintentional consequences should you unexpectedly have to access it to cover an income shortfall. It could trigger a large tax bill, and reduce how much money you have to fund retirement.  Other types of insurance can also help you. For example, life insurance will support your family if you were to pass away by paying out a lump sum.

Speak to an expert

As part of any considered financial strategy, it pays to look at all eventualities and to plan for the unthinkable. A financial adviser will be able to help you develop your finances, putting in place protection arrangements and ensuring you have emergency funds. With their advice, any bumps on the road don’t have to adversely derail you and your family’s financial future.


The value of your investment can go down as well as up and you may not get back the full amount invested. Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor. The Financial Conduct Authority does not regulate Taxation and Trust advice