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Many families would struggle to make ends meet if a family member developed a serious illness or died. This is why it’s so important to ensure you have the right level of financial protection and insurance in place. Our specialists can give you the peace of mind that you and your family are protected against the unexpected.
Why might you need protection?
The most common reasons for setting up financial protection are to:
- Maintain your lifestyle and make any debt repayments if you became unable to work due to an accident or illness
- Provide for your family if you died or developed a serious illness
- Cover a future inheritance tax bill without the need to sell the family home
Getting to know your family
In order to find out what level of financial protection you and your family need, our financial planners will get to know your financial and family circumstances. They can then begin checking for potential shortfalls or vulnerabilities. We call this disaster planning and it involves running through various scenarios to assess the impact on your family and their lifestyle, income, capital resources and future aspirations.
After any potential risks or vulnerabilities are identified, your financial planner can begin setting up the appropriate levels of protection to ensure any shortfalls will be covered.
Your level of protection and insurance policies should be reviewed regularly to ensure they remain suitable. People’s needs and circumstances change over time but in general you should contact a financial planner to review your protection if:
- You get married or enter a civil partnership
- You file for divorce
- Your children become independent, or a new child is born or adopted
- You change jobs or retire
- You start up or sell a business
- There are changes to you or your partner’s state of health
- You make lifestyle changes, such as quitting smoking
- You take out or finish paying off a mortgage or other loan
- You receive an inheritance
- You start reducing the size of your estate through making financial gifts
Our protection specialists
We have a dedicated team of protection specialists who have a deep understanding of the insurance products available. They aren’t tied to any single provider – instead they carry out in-depth due diligence on all insurance providers and products, and maintain an in-house list of approved plans. This means that your financial planner can select the most suitable plans and features to meet the unique needs of your family.
Frequently asked questions about financial protection
Why should you take out financial protection or insurance?
Protection is often needed to ensure your family will remain financially secure if you were suddenly unable to provide for them, for example, if you became ill or died. Protection can also be used to pay a future inheritance tax bill.
What types of financial protection are available?
Financial protection usually comes in the form of an insurance policy. There are many different types available and the right one for you will depend on your individual circumstances:
- Life insurance pays out a lump sum or a regular tax-free income when you die
- Income protection (salary replacement) cover pays a tax-free monthly income if you become unable to work due to a health condition or injury
- Critical illness or serious illness cover pays a lump sum or a regular tax free income if you are diagnosed with (and survive) a serious illness, or have to undergo certain complex surgical procedures
What is the difference between level and decreasing term life insurance?
Level term and decreasing term life insurance policies both provide protection for a predetermined length of time and will pay out a lump sum if you die within this period. However, level term policies specify a lump sum that can stay the same throughout the life of the policy, whereas decreasing term policies offer a lump sum that automatically reduces over time.
What is a whole-of-life policy?
Whole-of-life policies are a type of life insurance that last for the rest of your life, rather than for a predetermined number of years. They are often used to cover a future inheritance tax bill. Premiums can be guaranteed (the future cost is known) or reviewable (the future cost is unknown).
What are family income benefit policies?
Family income benefit policies pay money to your beneficiaries upon your death or if you are diagnosed with and survive a specified critical illness. However, unlike other life or critical illness insurance policies, they pay out a regular tax-free income until the plan’s end date, rather than a one-off lump sum. You can choose how long the policy payments will last, for example, until your youngest child turns 18.
How does income protection cover work?
This type of insurance pays out a tax-free monthly income, based on a percentage of your earnings, if you become unable to continue your normal occupation due to a health condition or injury. After a pre-agreed waiting period, you can claim a percentage of your earnings until the cover expires, you return to work, the policy ceases or you die.
What is critical illness or serious illness cover?
Critical illness cover or serious illness cover pays a tax-free lump sum if you are diagnosed and continue living with a defined illness, or have to undergo certain surgical procedures. The list of conditions includes heart attacks, strokes, brain tumours, a range of cancers and degenerative diseases such as Parkinson's. Critical illness does not cover mental health issues or musculoskeletal disorders but cover for these conditions are available with income protection plans.
Critical illness benefits for children are automatically included with most providers but with newer policies, there is more flexibility to remove this cover or increase the scope of it, depending on your personal circumstances and the insurer.
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You must bear in mind that an insurance policy will end if you do not make payments and there will be no cash value unless a valid claim is made.