Insuring against the unexpected – are you protected?

Often, a conversation with a client starts with a specific objective, such as ‘I want to save for retirement’ or ‘I want to save to pay my mortgage off early’, but in the vast majority of cases clients do not approach me with the objective of ‘I want to pay my mortgage off if I die or fall ill’, because I suspect people don’t really want to think about it.

This is why insurance on that person’s life or health is so important – it is about protection coming first, as all other plans fall down without it.

Case study

Alex and Ronnie are married and have two children. Alex gave up her career when the children were born and Ronnie then became the main earner in the household. They had a clear goal to save more into Ronnie’s pension and be mortgage free by the time Ronnie reached age 50. They don’t like to waste money, do like to have some luxuries and enjoy their holidays, and have a good handle on what they spend month-to-month and annually.

Sally:

“After an initial conversation with Alex about her and Ronnie’s financial planning goals, I arranged to meet them at their home. We initially talked about Ronnie and his pension planning and sacrificing his bonus into a pension and I developed the conversation further to ask about his and Alex’s insurance arrangements. It was clear that although a joint life cover was in place to repay the mortgage of £80,000 upon either death, there was no other insurance. Ronnie had no life cover, critical illness cover or sick pay provided by his employer and he was the main earner in the family. They have two children and their son was due to start a fee paying school in September as he moved into year 11 and this was a new additional outgoing.

Ronnie believed he would never be ill as he had never had any time off work due to sickness, and thought if he was ever sick he would be back to work within a few months and they had cash that could cover this period of time to meet the household outgoings.

After discussing this further and explaining the benefits of taking out the correct type of insurance cover on his life, and explaining the risks of him not doing this in real terms, Ronnie engaged with me to provide advice, giving me a budget of £75 per month to put towards this.

I recommended a multi-benefit policy, providing an £80,000 decreasing life term assurance with critical illness cover and £3,000 per month income protection starting after 13 weeks and paying until age 60, with waiver of premium which met the £75 per month budget.

After two months of paying premiums and having sailed through the medical underwriting process, Ronnie suffered a stroke aged 42. The impact on the family from this cannot be underestimated. The shock, devastation and concern about paying bills and school fees were overwhelming whilst dealing with medical appointments and hospital visits. After managing the claim process, the insurance company paid out the claim and Alex and Ronnie’s mortgage has now been repaid in full, reducing the family’s outgoings by £800 a month.

Ronnie is now on a phased return to work and has not needed to start the income protection payments yet but – should he be unable to work for a period of time – the income protection policy can cover his family’s household outgoings in full, including the school fees. This gives him peace of mind.”

Ronnie:

“Sally came to us to give us financial advice in summer 2019. We talked about our financial situation and what we wanted to achieve. My main goals were to contribute more to my pension so I could retire early and pay my mortgage off by the time I was 50.

Sally was very friendly, professional and knowledgeable. She advised me on my pension contributions but was clear that, really, the first thing we needed to think about was insuring ourselves against the unexpected. I’ll admit, I was reticent to take out cover and pay an insurance premium, as I have always kept excellent health. I don’t smoke or drink and attend the gym regularly, and I pride myself in having never a taken a day off work sick. Sally completely understood this but raised concerns that we would struggle financially should I become seriously ill. I was the main earner and my employer did not provide any sickness benefits. After an in-depth discussion, Sally provided us with a report recommending that I took out both critical illness and income protection. Sally gave us clear advice about the best level and type of cover and I was surprised at how reasonable the cost was.

Then, the unexpected actually did happen. In October last year I had a stroke due to a heart defect that had never been discovered. We spoke to Sally and she advised us to put in a claim. She kept in touch throughout the claim process and also reminded us about the extra benefits the insurance provided, such as being able to get a second medical opinion and extra support services for me and my wife. By January this year we found out our claim had been accepted and very quickly paid out. This has left us mortgage-free and has lifted a huge weight from my shoulders. During what has been a shocking and devastating time for our family, this has been such a relief. I don’t feel any pressure to return to work sooner than I am able to and my wife can still be around for both myself and my children without any pressure for her to work. We simply cannot thank Sally enough for her advice. It has changed our lives!”

How Evelyn Partners can help

Helping our clients protect themselves and their families against the unexpected is at the heart of what we do at Evelyn Partners. If you’d like to talk about your specific circumstances and find out how we can help, please do get in touch. All of our advisers are working from home and are available by phone. Give us a call on 020 7189 2400 to find out more or book an appointment for a free initial consultation.