Getting on and enjoying your life is crucial. Your time is precious and you should do what you want to do when you want to do it as much as possible. However, most people would like a safety-net in case things don’t go quite as expected.
We can help you with a range of Protection (Insurance) needs which we have detailed below, but don’t hesitate to get in touch if you have a different requirement and we’ll see what we can do.
Many people’s main concern is “How would my family cope if I was no longer around?” Life Insurance provides a lump sum of money for your dependants once you’re gone. Some policies will even pay out upon diagnosis of a terminal illness in order to help get your affairs in order or maximise the enjoyment of your time left. It can provide you with peace of mind to know that whatever the future holds, your dependants will be financially secure.
Generally, any monies from the policy are paid directly to your remaining dependants, but it is sometimes sensible to pay the proceeds into a Trust. Of course, it’s your decision, but we’ll help you make sure that whatever option you choose, it is executed in the most effective and tax-efficient way.
Critical Illness Cover
Like Life Insurance, Critical Illness Cover also pays out a lump sum value, but on diagnosis of one of a specified list of illnesses. The list of covered illnesses is determined by the individual provider, but generally Alzheimer’s, Cancer, Organ failure, Paralysis and Strokes are covered amongst a variety of others.
It’s designed to help you if you’re debilitated in such a way that would require you to change your lifestyle, whether that be retiring from work or alterations to your home. Generally, monies would be paid to you, but they can be paid to someone else if desired. It’s again a safety-net to help you and your dependants should the worst ever happen.
Many Life Insurance policies now offer an additional Critical Illness element, so you could have a single policy to cover both life insurance and critical illness needs.
Income Protection (PHI)
Income Protection or Permanent Health Insurance provides a regular income to you in the event your own income ceases due to sickness or disability. It provides a series of income payments (usually monthly) for a specified amount of time, often to your selected retirement date.
To keep premium costs down there will often be a deferred period that you would need to wait before the policy starts to pay out. Often we would align any ‘deferred period’ to end when sick pay ceases. That way you would be covered by your employer in the first instance and the insurance policy thereafter. The policy is designed to replace your income in the case of long term sickness and so will usually pay out until retirement, or the point at which you are likely to not require an income.
Mortgage Payment Protection (MPPI)
This policy is often taken out with a new mortgage, together with life insurance and critical illness. provides a regular income to you in the event your own income ceases due to an accident, sickness or unemployment (ASU).
Like Income Protection, Mortgage protection provides an ‘income’ if you are unable to meet your mortgage payments through sickness but also covers accidents and unemployment. It could be a crucial saviour in preventing a family from losing their home in the event the main mortgage-payer is no longer able to meet the costs of the mortgage.
The crucial thing to remember is that it is not a long-term benefit. Most Mortgage Protection policies will only cover up to 65% of your salary and will only do so for a maximum stated period, often only 12 months. In many cases, Critical Illness Cover could be a more viable option.
Private Medical Insurance (PMI)
You may not want to spend money on an insurance policy, and that’s your choice. But if you were to have an accident or fall ill, you may want to have the best possible care as immediately as you could.
Private Medical care could give you the quick, quality attention you require whenever you do need it, but it can be expensive. Private Medical Insurance could alleviate that concern by helping you with any costs incurred during treatments or consultations. Generally, Private Medical Insurance will cover some of the cost of overnight stays in a hospital, required scans or x-rays, consultations and some pharmaceutical costs post-treatment. As with any insurance policy, you can think of it as paying a little every month to ensure that when a big bill comes along, you already have it covered.
Inheritance Tax Mitigation
Inheritance tax will cost you a huge 40% of any of your assets passed onto your children or other beneficiaries after an initial £325,000 zero rate band (nil-rate-band). If you have a large house, investment or property portfolios, you could be very close to the limit already.
There are a range of legitimate, although somewhat complex, ways of mitigating this tax charge. In most cases the easiest solution is to just pay it, but a 40% tax bill could be a heavy burden to leave with your dependants, potentially meaning the sale or break up of assets before probate can be granted.
To help, you can set-up a Life Assurance policy with the proceeds paid into a trust that your dependants are able to receive monies from. That way, while your tax bill is still 40%, at your death the Life Assurance policy provides the liquid money to pay that bill. It means that the assets you wanted to pass on to the next generation can be done so without a big chunk taken out of it by HM Revenue.
This Payment Protection Insurance is optional. There are other providers of Payment Protection Insurance and other products designed to protect you against the loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk.