Have you considered what the financial impact would be on you and your family if you became seriously ill or were injured? And if so, have you put adequate protection in place?
If you haven‘t, you’re not alone. Not surprisingly, most people tend to avoid thinking about their own morbidity or mortality and therefore protecting our families in the event of ill health or death is often overlooked. However, failing to prepare adequately could have a serious impact on your lifestyle (and your family’s) so personal protection should form the basis of any financial plan.
The main types of protection planning are:
If you can’t work for any reason through illness or injury, this is designed to replace your salary by paying you a regular tax-free income. The most common reasons why someone may claim under this type of policy are due to backache or stress/anxiety. It’s also worth being aware that health or disability might stop you working before you reach the state pension age – a 50-year-old male, for example, is over five times as likely to be struck with a critical illness than to die before the age of 65.
This pays a one off tax free lump sum if you are diagnosed during the term of the policy with a specified critical illness. Policies can cover up to 170 illnesses or conditions, with the main ones being:
- heart attack
This provides a lump sum payment on death. As the name suggests, this life insurance is provided for your whole life, rather than a specified term (providing you keep up the payments). Used intelligently, this type of plan can help protect your family whilst they are still financially dependent and in some cases be used to pay any Inheritance tax due when you die.
In contrast, Term Assurance is life cover for a specified number of years or to a certain age. This type of policy is most typically used to cover a mortgage by paying out a tax free lump sum should you die during the period of such cover. Policies can be arranged to provide a fixed level of cover, if the mortgage repayments are on an interest only basis, or on a decreasing basis, if you have a repayment mortgage.
With any type of health related insurance, there are no guarantees that you will qualify for a policy – the insurance company’s underwriters will typically assess your application based on your health and lifestyle but our consultants are well placed from experience to gauge whether you are likely to be successful or not.
We offer a comprehensive protection planning service and take care of all the research and paperwork. As well as making the process easy for you, we can use any provider in the market – this ensures that we offer you the best value for money and the best policies available.
Take a look at some case studies from the charity led campaign 7 Families about ordinary families and the financial impact of long-term illness or disability.
Contact us here for some practical help regarding your own personal protection planning – rather than just going through life thinking the worst could never happen to you.
- This is a non-investment pure protection policy and has not cash in value at any time
- Some conditions may not be covered by a critical illness or income protection policy
- If you stop paying into a protection policy, you will no longer be covered.