Find out how coronavirus could impact your pensions, travel plans, investments and more
Coronavirus has sparked concerns over the global economy.
From investments and pensions to savings and travel, we round up how coronavirus could impact your finances.
What does coronavirus mean for investments?
Last week stock markets dropped to their lowest levels since the 2008 global financial crisis due to fears about coronavirus. Uncertainty over the spread of the disease could continue to impact markets across the world.
No one can predict how the markets will behave. Some of last week’s losses have been regained this week, but we do not know whether they will fall further or continue to rise.
However, while it’s tempting to sell when markets are falling, this crystalises losses. For investors with a long time horizon, losses may hurt in the short-term but should be recouped over the long term so it generally pays to sit tight.
What does coronavirus mean for savings?
UK interest rates have been notoriously low for years. Central banks across the globe, including the Bank of England (BoE), have proposed cutting interest rates further, if the stock market downturn affects the wider economy.
Mark Carney, governor at the Bank of England says: “The Bank will take all necessary steps to support the UK economy and financial system, consistent with its statutory responsibilities.”
A drop in interest rates could cause savings rates to fall again. Already this year we’ve seen NS&I slash rates and Premium bonds prizes and TSB cutting current account interest rates.
What does coronavirus mean for mortgages?
Should the BoE cut interest rates further, the cost of borrowing could fall as well. Variable rate or new fixed-rate mortgages deals as well as new personal loans rates could become cheaper.
What does coronavirus mean for pensions?
Most workers in the UK have a private or workplace pension scheme which holds investments in the stock market. As a result, the stock market slump caused the value of pensions to tumble over recent weeks.
However, selling when markets are down generally doesn’t pay. Savers with a long time horizon should have time to make up losses and if you are contributing to a pension every month you will now be benefiting from lower prices.
Savers who are close to retiring may want to consider if now is the time to take money from a pension or if the can delay making withdrawals.
What does coronavirus mean for travel?
The Foreign and Commonwealth Office (FCO), is currently advising against travel to Hubei Province in China and the city of Daegu in South Korea.
It is also advising against all but essential travel to the rest of mainland China, Cheongdo in South Korea and 11 small towns in Italy.
If you have plans to travel to any of the FCO’s listed countries, you may be entitled to a refund from your airline or holiday provider.
For more travel information and advice, read our article coronavirus: what are your travel rights?
What does coronavirus mean for travel insurance?
Most travel insurance policies will help you cover the cost of non-refundable expenses if your trip to a listed FCO country is cancelled or if you have to stay in quarantine abroad. This could include anything from flights and accommodation to pre-booked events and activities. Travel insurance is unlikely to pay out if you choose not to travel to a country that is not listed by the FCO for fear of contracting coronavirus.
Stuart Lloyd, travel insurance expert at Columbus Direct says: “If anyone is looking to cancel a trip, make sure you review your travel insurance policy as most, but not all of them, will cover cancellation for an epidemic or due to FCO advice. If there is no mention of epidemics or reference to the FCO included within the list of things that are covered under cancellation, then there is a good chance that any losses from not travelling will not be covered by the policy.
Unfortunately, choosing not to go on holiday due to fear of contracting Coronavirus or any other illness, is not something that your travel insurance would provide cover for.
So, if you are due to travel to a country or region that the FCO has not advised against travelling to, but cancel the trip anyway, this will definitely not be covered.”
What does coronavirus mean for income protection insurance?
Income protection is a type of insurance that pays out if you’re unable to work due to injury or illness.
If you are unable to work as a result of coronavirus, your policy is likely to pay so long as you developed the illness after your policy started.
New income protection policies are likely to cover time off due to the coronavirus if you haven’t contracted the virus at the time of applying.
Some providers, however, have changed the questions set to ask new customers if they have lived or travelled to a list of affected countered in the last 30 days, according to new findings from protection website and broker, ActiveQuote.
What does coronavirus mean for work?
If you have to take time out of work to self-isolate due to coronavirus you will be entitled to sick pay. Self-isolation should be considered as “sickness for employment purposes” according to health secretary Matt Hancock.
Where you are not ill and your employer asks you to stay home, you will be entitled to your usual salary.
Workers who have to take time off to care for someone affected by coronavirus will be entitled to leave but there is no statutory pay.
For more advice and information about your entitlements read out round up coronavirus: what are your rights at work?