The year 2008 will, no doubt, go down in the annals of history as one in which the credit crunch humbled huge economies across the world. The US, regarded as the strongest economy in the world, was the first to feel the biggest pinch as its giant financials institutions like Bear Stearns began to crumble and survived only after a government life-line had been administered.

Even as the Bear Stearns’ crisis was not expected to be the last of the series of havocs to be wreaked by the crunch, the near collapse of the entire Wall Street took many by surprise. A historic bailout, compared to none since the Great Depression, had to be agreed before it could also be saved.

Income protection and critical illness cover

Economic downturn precipitated by the credit crisis is continuing to cripple more institutions and many people are being rendered unemployed as the year finally draws to a close. But what is more daunting is the prediction that 2009 could be worse.

In face of economic crisis of the magnitude of what we have seen so far, with more jobs being lost and sources of income disappearing, people are expected to seek some safety outlets in case it gets too tough. Often life insurance could provide such escape route, especially with income protection policy and critical illness cover. In the UK several thousands of jobs are being lost and each day comes with more horrifying tales.

It was found a couple months ago that many people, adults, are still not realising the enormity of the challenge confronting us and have, as such, not made adequate plans to weather it. The advice was for people then to weigh the consequences of not being protected and suddenly finding themselves out of job either as a result of the economic downturn or incapacitated by illness. They were advised also to compare the cost with the cost of being adequately covered and having a lump sum paid to them for the upkeep of the family and bills. Premiums, we must not forget, could be as cheap as less than £10 per month and the benefits are worth the whole trouble!

In the event of a breadwinner’s death the bereaved are left worse for several reasons. Yet the payout could substitute the breadwinner’s salary and even pay off loans or others forms of debts that could add to their grief.

Economic downturn impacting on life insurance

Months into the crisis and with many jobs already lost or threatened, studies still reveal how less important people consider life insurance in the UK. A recent survey by Barclays Financial Planning found that more than half of the UK adults do not have life insurance cover. And the economic crisis is being blamed for this.

What is really shocking is the fact that rather than the crisis stimulating people to seek protection by taking out the cover, it is steering them away from it.

In the event of job loss, illness or death, clearly, many have not planned any means of responding to what could follow. With millions of people not even having savings or having too little to carry them through the crisis, it is rather frightening that people have not realised the real advantage of having a fallback in the form of life insurance.

At a time like this, when axing such expenses as life insurance seems to be the vogue, it is highly recommended the Brits consider finding out what benefits could be derived from having a sufficient life cover. Speaking to experts in the industry could help in determining what steps to take. And comparing deals could also help in deciding the policy that best suits one’s needs.