It is very important to ensure that any retirement planning has a provision for ill health to strike at any time.  The statistical background supports the fact that for any individual the probability of ill health striking at some point during their planning years is proportionately quite high.  What is abundantly clear is that like any form of insurance the risk/reward ratios are out of kilter.  Overall there may be a relatively small risk of ill health striking, however, the impact should it happen could be financially catastrophic.

Insurance has to be built into any retirement planning.  This can be in the form of an Income Protection Plan or what is known as Waiver of Premium on any pension plan.

An Income Protection plan is a policy that will pay out a replacement income for the duration of any period of ill health.

Waiver of Premium is a policy attached to a particular plan, e.g. a personal pension, and this will insure the premiums against ill health.  So if you are paying £200 per month (for example) into a pension, the waiver of premium will take over the pension payments for you in the event you suffer ill health.

The other possibility to investigate to build into any plan is Critical Illness Insurance.  This is a lump sum that becomes payable should you suffer a critical illness and in many respects this could be the most singularly destabilising factor in any retirement planning.

The important point to remember is that whilst ill health or serious illness is not likely there is a risk attached throughout a long period of years of planning and should such a catastrophe strike it would destabilise the financial plan to a catastrophic extent.  Therefore building it into any plan and putting in place the correct provision is vitally important.