Protecting Yourself in a Personal Economic Downturn

Most of us think of 'Economic Downturns' as a national or international problem but what if a household experiences one? While many of us think of getting home insurance or contents insurance many of us forget about other types. Many factors can cause a downturn in a household’s income and these usually revolve around the main breadwinners. That is why many families take out life insurance but there are other types of insurance that will provide financial protection in other scenarios.

A Family Member Falls Ill

When someone in your family falls ill or is diagnosed with a serious medical condition the last thing on your mind is finances. Unfortunately, it is an important factor to consider particularly if you have to pay for any treatment. If they are the main worker in the household and their income is relied upon then you should consider trauma insurance.

How can you protect your family from illness?

• Have proper health insurance to help pay for any treatments.
• Maintain healthy and active lifestyles as well as diet.
• Insure the workers in your household against illness.

Another unthinkable situation any of us could find ourselves in is a family member who has been in a serious accident.

Your Main Breadwinner Has an Accident

All businesses must now have Workers Compensation insurance in order to protect against accidents on the job. But what happens if you are seriously injured outside of work and you can no longer do your job? This is not always likely to occur but if it does then there are ways you can be prepared for it.

Having income protection insurance is the best way to protect against cases of a serious injury or illness. Usually, this type of insurance will provide approximately 75% of your previous income if you cannot work due to accidents or health problems. While this may not be all of your pay, think of the difference between that and having no income at all!

• How many wage earners do you have in your home?
• Can you survive if you lose one income?
• Do you have other sources of income? e.g. investments.
• Can your household afford any large and sudden bills combined with a loss of income?

Those are just a few of the considerations that you have to take when thinking about a possible decline in your financial fortunes. There are also some very happy occurrences that can cause your household to struggle financially.

Extra Children in the House

If you have had a child or are expecting you will probably realise that there will be a financial cost involved. Healthcare isn't always free and there are a number of other things to consider:

• Clothing for your new child.
• Furniture for their room.
• Time spent looking after the child.

This last point is critical in your household planning as one or both breadwinners in the house may have to cut back on work in order to look after a new child. In this way you have to think of your household as a mini-economy and any loss of income should be planned for. Insurance must be combined with sound financial planning and practices in order to have your household budget running like a well oiled machine.