If you ask a financial advisor about which element personal finances the public neglects most, the answer you would hear is “protection”.

“Protection” is CFA speak for ‘insurance’, and boy do we under-prioritise insurance when our finances are tight!

However, there is one vital piece of insurance that britons are still taking out  – car insurance. This isn’t really a reflection of our national prudence, given that the insurance is a legal obligation for all drivers. The level of protection afforded by car insurance can vary, but ideally a policy will provide sufficient cover for personal injury either to yourself or any other road user should the worst happen.

Personal injuries as a result of road accidents could keep you from working for several weeks, or even longer. Even an affluent household with adequate savings could quickly find themselves in financial difficulty as a result of temporary or permanent disability.

Loss of income can be devastating, and the extra costs needed to pay for medical bills or necessary equipment following an accident can have a nasty impact on the financial strength of your household.

We’re coming up to Christmas, in an anxious economic climate. There is little doubt that cash will be very tight in the coming months. However, let’s ensure our real priorities aren’t clouded by the festive spirit. Mince pies and champagne is tempting, but so is a stable and healthy future! 

Recent reports published by the BBC and other sources have been steadily documenting the decline in british spending on home, travel and life insurance as the economy of britain has stagnated.

I would like to implore you to look long term with your purchasing decisions with Christmas. Reconsider your current protection arrangements and decide whether improvements can be made.

What would you do in the event of a personal injury? Do you have a diversified basket of investments in your portfolio that would protect you in the event of a loss of income?