Protecting your most valuable asset: You!

11th December 2025

House, car, holiday, pet… insurance is an accepted part of life. It’s something to grumble about as premiums creep up year on year, but vital when things go wrong. Whilst celebrities are no strangers to insuring specific parts of themselves to protect their livelihoods – David Beckham’s legs, Julia Roberts’ smile, and Mariah Carey’s vocal cords for example1 – many of us overlook insuring our greatest asset, ourselves.

Meanwhile, most people feel underprepared for a crisis such as job loss, with almost two-thirds (65%) of UK citizens saying they wouldn’t be able to last three months without borrowing money.2

Why you are the most valuable asset in your financial plan

You might be the main breadwinner, supporting your family financially. Or maybe you’re the person keeping it all functioning by carrying that mental and physical load – from the PE kit, supermarket shop to the dog’s vet. Either way, if you became ill or died, it would result in not just a huge emotional challenge, but financial and practical ones too. The whole system stops working if you do.

Why financial protection should be part of your plan

Financial protection comes in the form of insurance cover that pays out essential expenses and helps the family financially in the event of a crisis, such as illness, unemployment, disability, or death.

While money can never replace a person, the right protection means your family can focus on what really matters, rather than worrying about the expenses and bills.

Afterall, financial planning is not just about growing wealth. At its heart, it is about looking after your loved ones, whatever the circumstances.

Types of financial protection to consider

Critical illness cover

More working-age people are reporting long-term health conditions than ever before. Since the pandemic, 470,000 additional people are out of the workforce on ill-health grounds and it’s a trend that looks set to continue.3

A diagnosis with a serious illness often comes not just with emotional and physical challenges, but with financial problems too.

It’s a time when focusing on adaptation and recovery should be your focus. Critical illness coverage can enable that, by providing a lump-sum to help with medical costs, income loss, or necessary changes to your home.

Critical illness policies provide a tax-free lump sum, paid out on the diagnosis of pre-defined illnesses, which include conditions such as heart attack, cancer or stroke.

When comparing policies, look carefully at the list of covered conditions and definitions. Lower-cost plans often focus on the a narrower list of illnesses, while broader policies may include partial payments for early-stage diagnoses.

Due to the increased likelihood of a claim, critical illness plans are more expensive compared to life insurance policies. However, even a little cover is likely to provide some relief in the event of a serious illness diagnosis.

Income protection insurance

If you are unable to work due to illness or an accident, then income protection gives a tax-free, steady income that enables you to stay on top of bills and daily expenses. The cover can be tailored to your income needs and employment status.

Life insurance

No one likes to think about death, but by planning for the worst, a life insurance policy can help a family cope. It provides a lump sum, typically tax-free, payable in the event of death. This could cover daily living expenses, mortgage repayments, or school fees, so the home is secure and any extra upset for children is minimised.

Mortgage protection

Mortgage protection is a type of life insurance that pays out if you die during the term of your mortgage, typically decreasing in line with a decreasing mortgage payment. It is a way of ensuring your family can keep meeting repayments and stay in the home.

A different option is mortgage payment protection insurance, which covers your mortgage in case of illness or redundancy. This typically pays out for a limited time, such as 12- 24 months.

The cover can taper to reflect your reducing mortgage over time with a repayment mortgage, or it can remain level, which is better for interest-only mortgages.

Financial protection when gifting money or property

If you gift money or property, you will likely be aware of the tapering seven-year rule, whereby after seven years the gift is exempt from inheritance tax. However, if you were to die within three years of gifting, the recipient would be liable for the full 40% tax.4

It is possible to take out a specific life insurance policy that pays out any tax due if you were to die before the seven years is up, thus protecting your beneficiary from an unplanned tax bill.

This is known as a gift inter vivos policy (whereby ‘inter vivos’ translates as ‘between the living’). Typically, it has a fixed seven-year term, with the sum assured reducing each year in line with the tapering tax liability.

Financial protection for business owners

Specific insurance cover can be appropriate if you run a business. This includes:

  • Key Person Insurance, which provides a payout if a vital employee, owner or director becomes seriously ill or dies,
  • Business loan protection, to ensure funds are available to repay any debts.
  • Shareholder protection, to enable remaining owners to buy a co-owner’s shares, thus keeping control of the business.
  • Relevant Life Insurance, a tax-efficient life insurance policy paid for by the business, providing a death-in-service benefit to the employee’s beneficiaries. Good for small businesses.

By reducing financial uncertainly, you can focus on the long-term success of the company.

Financial protection for freelancers and the self-employed

If you work freelance, your income might ebb and flow depending on projects, and you won’t have the safety net of employee benefits such as sick pay or death-in-service cover. That’s why having the right protection in place can be so valuable. Income protection insurance can provide a regular payment if you’re unable to work due to illness or injury, helping you stay on top of bills and maintain some peace of mind. You might also want to consider critical illness or life cover to ensure that, if the unexpected happens, your essential costs and loved ones are protected.

What happens if you don’t have protection in place?

It’s easy to assume that the State or your employer will help in a crisis, but often people over-estimate the support available.

State benefits will rarely provide enough to cover living costs, and accessing support such as Universal Credit can be limited if you have savings of over £16,000.

Statutory Sick Pay from your employer may help in case of illness, for up to 28 weeks if your average earnings exceed £123 a week. The rate is £118.75 a week (2025/26), paid in the same way as your wages.5 You may get more if your company has an occupational scheme.

Meanwhile, a death in service benefit is not necessarily linked to your personal circumstances, so may not be sufficient to repay a mortgage or meet your living costs.

With most of these options, households would likely face a sharp income drop. For the self-employed, there’s often no safety net at all.

Any tactic that relies on using your carefully invested savings is not a sustainable financial plan either. Watching a lifetime’s legacy quickly diminish will likely increase the stress of the situation.

How much financial protection do I really need?

It can be difficult to work out what financial protection you need, if any.

If you can answer ‘yes’ to any of the following questions, you should consider seeking professional advice:

  • Is your family reliant on your income?
  • Do you have any dependants that rely on your financially?
  • Do you have a mortgage or other long-term commitments?
  • Are you self-employed or without sick pay?
  • Do you have protection plans that haven’t been reviewed recently?
  • Do you simply want peace of mind?

For most people, there is no ‘catch-all’ solution and many families will be best served by a combination of options. As a result, the knowledge and expertise of a financial planner can be very helpful.

The role of a Financial Adviser in choosing the right protection

Choosing the right protection is about tailoring it to your circumstances, rather than just buying a policy off the shelf. That’s why a financial adviser is best placed to support you. Using lifetime cash flow analysis, they can model various scenarios that enable your individual protection requirements to be calculated.

Protect your future – start with a conversation today

At Holden & Partners, we are independent experts in financial protection. This means we can evaluate the full range of providers and options in the market, without bias or a salesy approach. We’ll help you make the most informed decision, based on a detailed understanding of your situation.

We can then secure the most competitive rates, considering factors such as medical history and policy coverage. With our expertise, you can safeguard your family’s stability.

For more information, have a read of our guide on The True Value of Financial Protection.

1 https://www.atlas-mag.net/en/article/insuring-a-body-part-is-this-reserved-for-stars
2 UK Savings Statistics 2024 – Saving Facts and Stats Report | money.co.uk
3 What we know about the UK’s working-age health challenge – The Health Foundation
4 How Inheritance Tax works: thresholds, rules and allowances: Rules on giving gifts – GOV.UK
5 Statutory Sick Pay (SSP) : Overview – GOV.UK