There are a variety of life-assurance and income replacement products available which can help to protect you against the financial consequences of unexpected events. Most people need life cover, but it becomes vital when you have found your partner for life and have children. As a minimum, you should have sufficient protection to pay off your debts and leave your spouse and children with something to live on if you pass away.
Surprisingly, around a third of the population have not reviewed their protection policies over the past five years. Furthermore, one in four homeowners do not even have sufficient life cover to pay off their outstanding mortgage. Over the course of your working life, changes in your personal circumstances and objectives means that it is crucial that you regularly review your life cover and protection requirements together with your existing protection benefits.
As an authorised independent financial adviser and financial planning consultant, I offer a personalised service providing protection advice no matter what your life-assurance objectives are or if you have limited affordability. Financial advice is provided for mortgage related or stand alone protection policies such as Level Term Assurance (LTA), Decreasing Term Assurance (DTA), Critical Illness Cover (CIC), Mortgage Payment Protection Insurance (MPPI), Permanent Health Insurance (PHI) and Family Income Benefit (FIB).
For more information, please contact my office on 0800 6345 422 or
Click Here For A Free Life Cover Quote
Term Assurance
In the unfortunate event of the death of the life assured during a specified period, this type of policy pays a tax free lump sum in return for a fixed premium. It is therefore the cheapest and simplest form of life cover available. The two different types of term assurance available are:-
- Level Term Assurance – Provides a lump sum on the death of the life assured (or lives assured for a joint life policy). The sum assured is only payable within the term of the policy and has no value on survival.
- Decreasing Term Assurance – Designed to provide for the repayment of your outstanding balance on a repayment mortgage, the life cover benefit decreases over the term of the policy. If set-up correctly, on the redemption date of the loan the policy finishes without value.
Income Protection
If you fall ill, suffer an accident or are made unemployed, income replacement insurance can provide vital cover for you. Each policy is designed to provide a replacement income to help towards your financial obligations or liabilities. The vast majority of companies offering income protection policies only provide a maximum benefit of 75% of your income - and in some cases it is as low as 50%.
With more than two million people in the UK aged between 20 and 64 years old having been off work for a period of more than six months (source: Department for Work and Pensions), income protection has rarely been more important whether you are employed or self-employed. Some employers do provide income replacement insurance, however this is often limited to six months full salary or six months full pay followed by six months half pay.
With so many different products and options available you should always aim to obtain impartial advice from an independent financial adviser. Unlike tied financial advisers, IFAs are able to make a specific recommendation from the whole market after assessing your existing protection together with your objectives and financial priorities.
The three main types of income replacement insurance available are:
Permanent Health Insurance (PHI) Pays a regular income designed to protect your standard of living if you suffer long-term sickness or injury. Benefits start after a deferred period (usually 4, 13, 26 or 52 weeks), which is arranged to complement any existing employers benefits (if any). It is payable until you return to work, pass away or the policy term expires, whichever happens first. It's called permanent because the insurer may not cancel the policy before the end of the term no matter how many successful claims you make.
Mortgage Payment Protection Insurance (MPPI) –This covers your mortgage payments in the event of you being unable to work due to an accident, sickness or unemployment. Depending on your employer’s benefits, you can opt for a combination of the different types of insurance on offer.
Family Income Benefit (FIB) –This cover is designed for those with young families and provides a tax free income if the life (or lives) assured unfortunately dies during the term of the policy. There is no cash value if the life (or lives) assured live to the end of the policy term.