From investments and pensions, to savings and travel, we explain how the pandemic could impact your money.
The coronavirus pandemic has sent shockwaves through the global economy, affecting the finances of people around the world.
From investments and pensions, to savings and travel, we round up how the virus could impact your money.
What does coronavirus mean for investments?
Stock markets around the world have tumbled to their lowest levels since the 2008 global financial crisis owing to fears about the coronavirus. Uncertainty over the spread of the disease could continue to impact markets throughout the world.
While it's tempting to sell when markets are falling, this crystallises 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?
The Bank of England has cut interest rates twice so far, as part of emergency measures to protect the UK economy against impact from coronavirus.
On March 11, the Bank cut the base rate to 0.25%. This was followed by a second cut that saw the base rate reduce to 0.1%, its lowest level in history.
The recent interest rate cuts spells bad news for savers and high-interest rate current account holders. Already this year, we've seen NS&I cut rates and Premium Bonds prizes.
In January, Santander announced that it would cut the interest rate on its 123 account from 1.5% to 1% on balances up to £20,000 from 5 May 2020.
A month later, TSB revealed that it would cut interest on its Classic Plus account from 3% to 1.5% on balances of up to £1,500 from 2 May 2020.
Most recently, Starling Bank cut rates on its personal current account down to 0.05%, in response to the Bank of England's first base rate cut.
We are likely to see interest rates across savings and current accounts fall further over the coming year.
What does coronavirus mean for mortgages?
Cuts to the base rate usually bring down the cost of borrowing. When the Bank of England made its first cut, mortgage providers were quick to pass on the reduction to customers with a tracker or standard variable rate (SVR) mortgage.
While the most recent base rate cut will see rates fall for borrowers with a tracker mortgage, the impact of coronavirus on business workforce may limit the extent to which further reductions can be made.
What does coronavirus mean for pensions?
Most workers in the UK have a private or workplace pension scheme that 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-term 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 they 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.
What does coronavirus mean for travel insurance?
Most travel insurance providers have now limited the amount of cover they offer for disruption caused by coronavirus.
While some companies such as LV=, Aviva and Admiral have suspended the sale of travel insurance to new customers altogether, others, such as InsureandGo, no longer offer cover for any cancellation claim in relation to coronavirus.
Insurers have warnings on their websites to let you know whether you'll be covered for coronavirus. If you are still unsure, get in touch with their customer service before purchasing a policy.
If you purchased travel insurance before the cover limitations were implemented, your policy should 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.
Unfortunately, choosing not to go on holiday owing to fear of contracting coronavirus or any other illness, is not something that your travel insurance would provide cover for.
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 owing 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?
The UK government is urging people to avoid all non-essential contact. This includes closing schools and working from home where possible.
If you have to take time out of work to self-isolate due to coronavirus you will be entitled to sick pay.
If you are on a zero-hours contract, you may be entitled to sick pay. To qualify, you will need to have earned more than £118 per week before tax over a period of eight weeks.
Self-employed workers are not currently entitled to statutory sick pay.
This article was first written by our sister magazine Moneywise.