Life insurance, savings, wills: positive money changes from Covid-19

The pandemic has meant that some people are in a healthier financial position.

It’s difficult to overstate what a dreadful disaster Covid-19 has been. From the lives lost to the impact on education and jobs, the effects will be felt for decades to come.

But the truth is that the pandemic has also provided some important money lessons, and resulted in some positive financial changes for some people.

I need protection

Life insurance is a crucial form of protection for anyone with financial dependents, whether that’s a spouse, children or even older relatives that you care for.

However, it’s not always been a financial product that’s been embraced by people who would benefit from it. After all, nobody really wants to think about what may happen to their loved ones when they die.

The pandemic has seemingly changed that though, prompting people to consider how their families would fare financially if the worst was to happen.

A new study by Canada Life has suggested that more than one in 10 adults (11%) have thought about or actively taken out a life insurance policy since the start of the pandemic.

Importantly, it’s the 18-34 age group that is most likely to do so.

This is an encouraging development.

There are still far too many families that find they have to scrabble around to make ends meet after an unexpected death, particularly when you consider that life insurance can be incredibly cheap.

Check out our guide on getting the best low-cost life insurance policy.

Getting into the savings habit

There’s no disputing the fact that the pandemic has had a negative effect on the incomes of plenty of people, who have had to deal with reduced hours, furlough or even redundancy.

But that isn’t the case for everyone, while the fact that we have had far fewer ways to spend that money as the hospitality industry has been closed for large chunks of the last year, has meant that many households have been able to save a few quid.

The lack of a savings safety net has been a common concern in recent years, but the pandemic has meant that at least some of those families who had nothing set aside have been able to build something of a savings pot.

For example, the Office for National Statistics publishes data on the household saving ratio ‒ essentially the average amount of a household’s disposable income that they are saving ‒ which reached 16.1% in the final quarter of last year.

That’s the second-highest ratio since records began back in 1963.

It has led to a boom for investment ISAs too.

Figures from the Investment Association show that, in April, a whopping £1.5 billion was put into stocks and shares ISAs across the country.

That’s not only the highest April figure in six years but also almost double the amount saved in these accounts in April 2020.

I need a will

Dying without a will in place can cause vast amounts of confusion, and potentially a fair bit of heartache, for the loved ones you leave behind.

The pandemic has apparently focused minds here too, with separate research from Canada Life finding that millions of us have taken the opportunity to get our intentions in writing.

It found that around 4.9 million people have written a will over the last year, 4.1 million have written a living will, and 5.4 million people have changed or added guardians for their dependents to an existing will.

Encouragingly, there has been more thought about later life too, with 4.6 million looking to register a lasting power of attorney, ensuring that a loved one can act on their behalf should they lose the ability to do so themselves.

We’ve put together a comprehensive guide to writing a will, as well as how to set up power of attorney.

Getting serious about budgeting

Many of us have had to take a step back and consider how we were spending our money in the pre-Covid days, and whether that cash can still be justified in the future.

For example, plenty of people have subscriptions and memberships that they don’t really make the most of, or which they have been locked out of over the last year. 

It’s not just those leisure pursuits though, as Brits have also taken a fresh look at our utility suppliers and whether we can find a better deal.

Figures from Energy UK for example show that there have been 2.6 million electricity supplier switches in 2021 so far, up by 2% on the same period last year, while March saw the second-highest-ever switching figure. 

Of course, the test will come once things get back to something approaching normal ‒ will we still need those five different streaming site memberships for example?