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PROTECTION
Life Protection Options
There are several ways in which you can protect yourself and your family in the event of an untimely death.
Most people take out life assurance to provide for their families and alleviate any financial worries at a difficult time.
Most people take out life assurance to provide for their families and alleviate any financial worries at a difficult time.
Level Term Assurance
Level Term Assurance pays a lump sum in the event of death during the term of the policy. There is no investment element within a term assurance contract, so at the end of the term there is no maturity value and life cover ends. The benefit is paid tax-free. Premiums are usually monthly and fixed throughout the term. As the term and benefit are known from the outset, Level Term Assurance can be a cost-effective method of protection.Decreasing Term Assurance
Decreasing Term Assurance works in a similar way to Level Term Assurance, but the benefit is set at the outset and gradually decreases over the term of the policy. These policies can be used as cover for a repayment mortgage, or other loans where the amount of capital outstanding also decreases over time. As the benefit reduces over time, the premiums are usually lower than for Level Term Assurance.Family Income Benefit
Family Income Benefit is a Term Assurance policy which pays a regular monthly/annual tax-free income in the event of death, instead of a lump sum, to your dependants up until the end of the term of the policy.Critical Illness Cover
Critical Illness Cover is usually available as an addition to all term assurance plans but can be bought on a standalone basis. Critical illness provides a lump sum benefit / income in the event of diagnosis of certain critical illnesses, such as heart attack, stroke, transplant, blindness, total and permanent disability. The illnesses covered will be specified in the policy along with any exclusions and limitations – these differ between insurers.
Income Protection Options
Income Protection Benefit
This policy is designed to provide an income (after a defined waiting period) in the event the insured individual is unable to work due to ill health or accident. The level of premium will depend upon the amount of benefit and term selected. Most policies cease to pay the benefit once the insured can return to work. Income protection policies are usually written to retirement age or 60 if earlier.
Business Protection Options
Keyperson/Shareholder/Partnership Protection
A business may want to protect the key employees within their firm – perhaps the key salesperson, or the IT manager, without whom the business would not function properly. Keyperson / shareholder / partnership protection can provide a fixed sum should the individual be unable to work, or even die. The benefit will be designed to cover the firm’s expenses in meeting any emergency costs, recruiting a replacement employee and protecting the future of the business.If a shareholder were to pass away, the firms remaining shareholders or directors may want to purchase the deceased’s shares from their estate promptly to maintain control of their business. The same scenario also applies to partners in a firm.
FREQUENTLY ASKED QUESTIONS
If you need convincing that life insurance is a good product to buy, ask yourself this question. If you were to die, how much money would your family have to live on? Many families would find themselves running short of money very quickly. Your salary would stop, but the household bills would keep coming in.
A pay out from a policy could make the difference between your loved ones facing a financial struggle at a challenging emotional time, and being able to maintain the sort of lifestyle they enjoyed when you were still around.
Even if you are not the main breadwinner, you may still be the primary care giver, providing housekeeping and other home-based services that are vital to your family’s well-being and would be costly to replace.
The simple answer is probably less than you think. The cost of life insurance premiums has tended to come down over the last few years. For example, a healthy non-smoker aged 30 could get a 25-year term policy that would pay a lump sum of £100,000 for as little as £7 per month. It’s a very small price to pay when you consider that having no insurance could mean real financial hardship.
There’s no simple answer to this, as the amount will vary with your lifestyle and your circumstances. You may want to protect your mortgage, cover household bills or provide a lump sum so that your children get a good education. The great thing about life insurance is that it can be tailored to your needs. I can help you assess how much is right for you, depending on your family circumstances.
Term life insurance policies run for a fixed period of time such as 10 or 25 years and pay out if you die during the term of the policy. There are various forms of cover to choose from, including level term insurance, where the cover remains at a constant level throughout the policy, or decreasing term insurance where the level of benefit decreases over the policy term, although the premiums remain level. This type of cover is typically used in conjunction with a repayment mortgage, with the intention of repaying the outstanding amount if death occurs during the term. During the life of the policy, cover will cease if premiums are not maintained. There is no payment at the end of the term; if you live beyond the term of the policy, the cover terminates.
Many people take out critical illness cover when they take out life insurance. It provides additional cover that means that their family would be financially protected if they were to suffer a critical illness and find themselves unable to work. Combining these two types of policy can result in cheaper premiums than if two separate polices were to be taken out. As with life insurance you can specify the level of cover you want. The illnesses covered are set out in the policy and include the major ones such as cancer and heart disease, however illnesses covered can vary between providers and it is vital to check what’s covered and any exclusions that may apply.
Whole-of-life polices, as their name suggests, provide cover that lasts a lifetime. This type of policy doesn’t normally have an end date, so premiums are paid until you die, at which point the policy pays out (sometimes premiums end at a certain age, say 80, but cover continues until your death). This type of cover is generally more expensive than term insurance as the policy will inevitably pay out one day, if premiums are maintained.
here to help!
Finding the right life insurance policy is important; no-one wants to leave their family facing financial hardship if they were no longer around to provide for them. I’m only a phone call away, so if you have queries or would like to discuss the sort of life insurance policies that would work best for your financial circumstances, please do get in touch.
CLIENT TESTIMONIALS
Was recommended by friend. Really good communication and advice given all the time. Excellent support, very friendly person . Thank you for all of you help and time.
Dimitar & Mihaela - Stoke
How can you help me?
It can be hard to assess how much life insurance you need on your own, but that’s where I can help you. In order to reach a suitable figure, you will need to discuss and consider how much debt you have, including your mortgage, other loans you may have, including credit card debt, and also check if you have any life cover available as part of your employment package. I will spend time assessing your needs and have the specialist expertise and knowledge that’s needed to help ensure you get the right policy in place.
TOP TIPS
The younger and healthier you are, the lower your premiums are likely to be. As you get older you’ll be seen as a higher risk to insurers. Acting sooner rather than later means you’ll be able to lock in a lower premium for the duration of the cover.
The cost of life insurance is based on a number of factors. These include not only the amount of cover you take out and the length of the policy, but also your age, state of health and lifestyle. Stopping smoking or losing a significant amount of weight could mean you get a better deal with cheaper premiums.
People’s insurance needs change when they buy a property or have a family, take on more debt or change jobs. Cover can be combined with protection against accidents, critical illness and unemployment too.
Generally the cost of two single policies doesn’t cost much more than a joint policy. A joint policy only pays out once and would leave the surviving person without cover. Taking out single policies means that if a claim is made on one, it doesn’t impact the other.
Putting your life insurance policy in trust ensures that in the event of your death the proceeds will not form part of your estate when it comes to calculating Inheritance Tax. There is another benefit too, as life policy proceeds can be paid out before probate is granted and therefore provide an effective means of getting money quickly into the hands of beneficiaries, or of paying the Inheritance Tax due before probate can be granted. Putting a policy in trust isn’t usually a difficult or timeconsuming process.
People’s life insurance needs change throughout their lives, for instance when they buy a property, have a family, change jobs, or take on more debt. It’s often at times like these that it’s worthwhile considering combining life cover with protection against accidents, critical illness and unemployment too. Reviewing your policy regularly will help ensure that you always have the right level of cover in place to meet your family’s needs.
Happy to Help
Please feel free to pick my brains. I spend hours staying up to date with the market so you do not have to.
