PROTECTING YOUR FAMILY, YOUR BIGGEST ASSET

Life is unpredictable and filled with a multitude of potential risks, the harsh truth is that an unexpected serious illness, a debilitating injury or even a sudden death can drastically affect a family’s financial stability.

Insurance is not just about numbers and premiums; it’s about securing peace of mind. By implementing the appropriate insurance policies, you can rest assured knowing that you and your family have a financial safety net to fall back on if the unexpected should occur. This way, you prepare for the worst and ensure your and your family’s future.

Life is unpredictable and filled with a multitude of potential risks. By understanding and selecting the right insurance policies, you can confidently navigate life’s uncertainties, knowing that you’ve taken steps to safeguard your and your family’s financial well-being.

Protecting your family in the event of something happening to you or a loved one

Life insurance

Life insurance serves as a financial safety net, promising a predetermined sum to your chosen beneficiaries should you pass away while the policy is still active. The cost of life insurance hinges on several factors, such as your age, health status, lifestyle and the extent of coverage you require, in addition to the specific policy type you opt for.

Securing the right life insurance policy is crucial in various circumstances. These include when taking out a mortgage, cohabitating with a partner or welcoming a new child into your family.

Moreover, life insurance can form part of estate preservation planning if your estate has significantly appreciated in value and you anticipate an Inheritance Tax (IHT) bill. By setting up a life insurance policy written in an appropriate trust, you could provide for this tax liability.

Typically, IHT applies at a 40% rate on the value of an estate above the ‘nil rate’ allowance of ￡325,000 (frozen until April 2028). This figure escalates to ￡500,000 if a primary residence is bequeathed to a direct descendant. Assets passed to a spouse or registered civil partner are exempt from this tax.

How life insurance works

Life insurance provides your loved ones with a lump sum payment upon your death, provided the insurance policy is still in effect. These payments are exempt from tax and can be utilised as needed, though they are commonly used to replace lost income or settle hefty debts like a mortgage.

Payments can also be arranged to go directly into a trust, enabling your family to access the

funds more promptly. This arrangement ensures that the payment doesn’t form part of your estate; thus, it’s not subject to IHT.

Different types of life insurance

Life insurance comes in various forms, each tailored to meet specific needs and circumstances. One common type is term life insurance, also known as standard life insurance. Here, you determine the length of your cover or the ‘term.’ Should you pass away within this term, the policy pays out. However, if you survive beyond the term, the policy doesn’t pay out any death benefit, and there’s no return on the premiums you’ve paid.

Consider some form of income protection

You might not require income protection insurance if you are nearing retirement, have substantial savings or have an employment contract that provides sufficient sick pay. However, given the limited state benefits available and the absence of statutory sick pay for self-employed individuals, those of working age should consider some form of income protection if it’s financially viable.

It’s important to note that neither income protection nor short-term income protection policies cover redundancy. However, they often include ‘back-to-work’ support if you’re off sick.

Critical illness cover

Being diagnosed with a critical illness can have a significant impact on your financial situation, particularly if you need to take time off work for treatment and recovery. If you were unfortunately diagnosed as suffering from a critical illness, this kind of insurance could make all the difference to how well you’re able to cope financially. Especially as you might be too ill to work, someone else might need time off work to support you, you might face medical expenses or you might need to make household alterations.

Critical illness cover gives you a financial buffer that can be used however you need, freeing you up to concentrate on getting better. Ultimately, this type of insurance is designed to alleviate financial stress by providing a lump sum payment upon diagnosis of a specified condition covered by your policy.

Arranging cover

The cover can be arranged to clear your mortgage balance, settle other existing debts, take care of

household bills and account for new medical treatment costs, especially if you cannot work for several months or years during convalescence. You also have the option to increase the cover over the term to keep pace with inflation. Alternatively, if your primary concern is covering the cost of your mortgage, you can opt for decreasing cover.

Understanding the payout process

Critical illness policies pay out once and then end. The specific conditions covered can vary between providers, but most insurers cover standard illnesses such as cancer, heart attack, stroke, organ failure, multiple sclerosis, Alzheimer’s disease and Parkinson’s disease. For an additional charge, you may add specific diseases to your cover. Some insurers also extend the coverage to your children.

Our team is on hand to offer you advice and information to help you and your family to get protected. Call us today on 01558 825 950