Bad news can impact on any one of us at any time, in the form of an illness or sudden death. We don’t like to think about it but we do have to plan for it. So having the correct protection strategy in place will enable you to protect your family’s lifestyle if your income suddenly changes due to premature death or illness. However, choosing the right options can be difficult without obtaining professional advice to ensure you protect your family from financial hardship.
Obtaining advice is essential to making an informed decision about the most suitable sum assured, premium, terms and payment provisions. We work with our clients to create tailored protection strategies that meet their financial goals and needs and we’re committed to ensuring that our clients enjoy the best financial planning service available.
Whether you’re wanting to provide a financial safety net for your loved ones, moving house or a first-time buyer looking to arrange your mortgage life insurance – or simply wishing to add some cover to what you’ve already got – you’ll want to make sure you choose the right type of cover. That’s why obtaining the right advice and knowing which products to choose is essential.
Life assurance helps your dependants to cope financially in the event of your premature death. When you take out life assurance, you set the amount you want the policy to pay out should you die – this is called the ‘sum assured’. Even if you consider that currently you have sufficient life assurance, you’ll probably need more later on if your circumstances change. If you don’t update your policy as key events happen throughout your life, you may risk being seriously under-insured.
As you reach different stages in your life, the need for protection will inevitably change. These are typical events when you should review your life assurance requirements:
• Buying your first home with a partner
• Having other debts and dependants
• Getting married or entering into a registered civil partnership
• Starting a family
• Becoming a stay-at-home parent
• Having more children
• Moving to a bigger property
• Salary increases
• Changing your job
• Reaching retirement
• Relying on someone else to support you
• Personal guarantee for business loans
Your life assurance premiums will vary according to a number of different factors, including the sum assured and the length of your policy (its ‘term’), plus individual lifestyle factors such as your age, occupation, gender, state of health and whether or not you smoke.
If you have a spouse, partner or children, you should have sufficient protection to pay off your mortgage and any other liabilities. After that, you may need life assurance to replace at least some of your income. How much money a family needs will vary from household to household so, ultimately, it’s up to you to decide how much money you would like to leave your family that would enable them to maintain their current standard of living.
There are two basic types of life assurance, ‘term’ and ‘whole-of-life’, but within those categories there are different variations.
The cheapest, simplest form of life assurance is term assurance. It is straightforward protection, there is no investment element and it pays out a lump sum if you die within a specified period. There are several types of term assurance.
The other type of protection available is a whole-of-life assurance policy designed to provide you with cover throughout your entire lifetime. The policy only pays out once the policyholder dies, providing the policyholder’s dependants with a lump sum, usually tax-free. Depending on the individual policy, policyholders may have to continue contributing right up until they die, or they may be able to stop paying in once they reach a stated age, even though the cover continues until they die.
