The Biggest Financial Risk Isn’t Death — It’s Being Alive
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only. You should always seek professional advice from an appropriately qualified adviser.
All contents are based on our understanding of current legislation, which is subject to change, any information provided here is only correct at the time of posting.
Most people assume the greatest financial threat they face is dying too soon. It feels dramatic, final and easy to imagine as the ultimate disruption. But in reality, the biggest financial risk isn’t death at all. It’s living, living with a critical illness for instance, causing income shocks and lifestyle changes that quietly erode financial stability over time.
It’s counterintuitive, but for many clients the real danger isn’t that life ends early. It’s that life carries on in ways their finances weren’t prepared for.
We often meet individuals who have insured their homes, cars, pets and even their mobile phones, but haven’t protected the income that pays for all of it. Let’s explore the real-life risks that arise not from dying too soon, but from being very much alive.
The Impact of Long-Term Sickness
One in eight workers in the UK will experience a long-term sickness absence during their career, and many underestimate the financial shock this creates.
Take for example, a 47-year-old employed accountant, who develops a chronic back condition that forces them to take six months off work. Their employer offers only three months of full sick pay before dropping them to statutory sick pay. Overnight, their monthly income fell from just over £3,500 to £424.45 a month. Their mortgage alone was £1,150 per month, so drastic changes would need to be made to their lifestyle or potentially having to call upon their emergency fund which may be non-existent or only last for a short period of time.
Savings may disappear within weeks. Credit cards could be used to bridge the gap. But, by the time they return to work, debt may have been accumulated, emergency funds wiped out and their financial plan had been set back years.
The real issue wasn’t the illness itself; it was how long it lasted. Short-term problems are manageable. Long-term conditions can stretch a household’s resilience until it snaps.
Income Loss and the Domino Effect
Income is the engine that powers every financial goal, mortgage payments, savings, holidays, debt management and retirement planning. When income stops, everything else may begin to wobble.
Most people try to absorb income shocks using savings, credit cards or help from family. But the longer the disruption lasts, the harder it becomes to keep the rest of life intact.
Lifestyle Downgrades During Hardship
Clients often underestimate how quickly lifestyle changes become necessary when income reduces.
This might include:
Switching children from clubs/private school or activities to cheaper alternatives
Selling a car or downsizing a home sooner than planned
Cancelling holidays, subscriptions or social activities
Replacing quality purchases with the cheapest possible options
These changes don’t just affect day-to-day living. They shape a family’s wellbeing, relationships and mental health. Lifestyle is usually one of the first things sacrificed, and one of the last to recover.
How These Risks Disrupt Retirement Planning
The greatest long-term casualty of life’s financial shocks is often retirement.
Periods of reduced income typically lead to:
Lower or paused pension contributions
Loss of employer contributions
Cashing in savings or ISAs intended for long-term growth
Taking on debt that later limits retirement saving
Clients tend to think a setback today only affects today. But in financial planning, today often shapes the next 20 years.
So What Can You Do?
This isn’t about assuming the worst. It’s about acknowledging the most likely financial risks people face during a long and busy life.
The goal of good planning isn’t fear — it’s resilience.
There are tools that help protect income, safeguard savings, and keep long‑term plans on track even when life becomes unpredictable. What’s right for one person won’t be right for another, which is why personal advice matters.
Summary
The biggest financial risk isn’t dying early. It’s living a full, long life filled with unexpected twists that disrupt income, force lifestyle adjustments and reshape retirement plans. Long-term sickness, caring responsibilities for elderly relatives and job loss are common experiences that many households underestimate until they arrive.
If you’d like to explore how to protect your income, lifestyle and long-term goals, consider getting in touch with a qualified financial adviser who can advise you on your options.