Restructure the essentials

You can save money and stay protected

There’s little sunshine at the moment. Not much relief. The recent mini budget and its fallout have further unsettled the UK’s finances and, for all of us, the road ahead looks somehow more complex than it did a month ago.

Ahead of September’s mini budget, the Bank of England had raised interest rates to 2.25%, a hike of 0.5% to the highest level seen since the 2008 financial collapse. Economists differ on where rates go from here but confusion in the aftermath of Kwasi Kwarteng’s mini budget led some to suggest that a hike to 6% is possible in a ‘severe case’ scenario.

For many, alarming interest rates have replaced rising energy costs as the primary concern. A price cap will somewhat shield households, families and businesses from the full financial brunt of rising energy bills, but such an intervention to protect mortgages simply isn’t possible.  

Restructure the essentials, cut the cuttables

Facing tough times, whether they’re upon us now or they’re maybes on the horizon, the natural response is to lean out our spending. We can pause purchase of big-ticket items (holidays, cars, DIY projects) and we can recut the household budget. 

Very basically, household costs fall into two categories: essential and non-essential. Essential spending (food, bills, energy, home) can be restructured (admittedly it’s much easier to do this in normal times) but likely can’t be cut entirely. 

No, the cuttables live in the non-essential category. It’s the gym memberships, the tech, the treats, the subscriptions, the car trips, the meals out, the entertainment … 

It’s not a wonderful thing to have to do. But by restructuring the essentials and cutting the cuttables we have a better shot at protecting the basics. We can buy some financial headroom through troubling times. 

Life insurance - what category?

If you’re now faced with making cuts to your budget, a first exercise may be to batch and separate the essentials from the non-essentials. In other words, separating what can be restructured from what can be cut.

If you have life insurance, critical illness, income protection or another policy in the life insurance family then you may instinctively move it into the non-essential pile. It’s cuttable.

After all, it’s not something you use every week. Or even every year. Plus it feels so theoretical: it’s a monthly what if payment you may never need. 

An essential shield 

Your protection policy was taken out for very sound reasons. Chiefly, it’s there to ensure that a catastrophe in your household won’t pile financial hardship on top and won’t threaten the basics. 

Claims funds are there to fill gaps and ease strain. They’re there to cover mortgages, pay bills, maintain running costs …

What we’re saying is that life insurance may not feel essential, in the strict sense of the word, but it acts as a shield to protect the more tangible essentials. When families and loved ones have to make claims, they’re more likely than not to view that money as essential. 

Or perhaps the job(s) that it does is essential.

Restructure the essentials

We earlier stated that essentials can be restructured. This goes for life insurance too. 

And the thing is, unlike energy bills (where shopping around won’t do much good right now) or food prices (which are higher across the board), your protection policy can be trimmed down to match your specifications. 

Work with us to restructure and you can keep essential protection in play rather than cancelling, being unprotected, and risking higher premiums if and when you return. 

And when we said that life insurance is not something you can use every week or even every year, that may not be true. Insurers generally offer a whole range of free services that policyholder simply don’t make full use of.

Private healthcare, therapeutic services, virtual GP consultations, gym memberships … you could be entitled to services you can use every day. If in doubt, let’s talk. 

There may be big value in your policy that you’re yet to explore, and by staying protected you can bring your life insurance to life in practical ways for you and your loved ones. 

The bottom line is that life insurance doesn’t seem essential … until it does. 

Talk to us about restructuring if times are tight. We’d love to help - we’re here if you need us.