Protection

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Description of what is meant by protection

Protection refers to an insurance which is in place to protect you, and your loved ones in the event of death, an accident, illness, or loss of work. There are many different types of insurance, to cover many different things. We tailor the needs to every individual customer, as not everyone needs the same insurance. This is of course a sensitive area, one that many people decide not to talk about, yet is one of the most important factors, particularly when taking out a mortgage. You pay insurance for your mobile phone, for your car, why wouldn’t you insure yourself to protect you and your loved ones?

Life Cover

Life cover will pay in the event of the death of the insured person, or if the insured person is diagnosed with a terminal illness, with life expectancy of 12 months or less. The provider will assess you as an individual, how much you want to protect yourself with and over what period of time you’d like this in place, and the premium will be calculated using these figures. There are a few different types of life cover, suited to different individuals. Please see below:

  • Decreasing term assurance – this is mostly taken out by people with a residential mortgage on a repayment basis, whereby the debt is reducing each year with their mortgage payments. The amount of cover will reduce over the period of time you have it too. Let’s say you take out a policy of £350,000 over a 25 year term, and you have taken out a mortgage of the same. We will ensure that the life cover reduces slower than the mortgage, so generally speaking in the event of death, the amount will tend to be higher than the mortgage balance itself, but the amount that will pay out will still reduce as the years go on. 
  • Level term assurance – this insurance means that the amount of cover will not reduce as time goes by. Landlords will generally have this type of cover in place, given they have interest only mortgages. Families tend to also take this out, as it’s only marginally higher on the monthly premiums than a decreasing term assurance product, and means you can rest happily knowing that your life cover will pay out the same amount no matter when it might be needed.
  • Increasing term assurance – This type of insurance is probably the least common, it’s whereby the amount of cover provided increases over the term, as well as your premium payments. This can often be used by people who don’t right now need much, and want to pay a lower premium, but in the future may need a higher level of cover, and will be happy to pay the higher premium.

Critical Illness Cover

Critical illness cover will cover you in the event of becoming critically ill or being diagnosed with a critical condition. Each provider has their own list of what they will cover, but they are largely the same. They have a huge list of conditions that will be covered by this policy and usually things such as a heart attack, invasive cancers,  organ failure, loss of senses such as blindness etc. are covered, but the list is vast. When someone is unfortunately diagnosed with a critical illness, it can be life changing for you and your family. To have the critical illness policy in place can work as a safety net, and although it can’t change the diagnosis, it can relieve the concern of your financial position, and ensure there is not a financial burden on your shoulders.

Income Protection

Income protection is one of the most common policies taken out, it protects your income in the event you are unable to work. If you were to have a serious accident, and you are unable to go to work for a lengthy amount of time, how would you be able to cover your outgoings with the loss of earnings? Not all employers are generous enough to cover your income whilst you’re off sick for a long period of time, and if you’re self employed you have only your savings to fall back on. Income protection can provide you with a monthly income until you’re back on your feet and ready to go back to work, thus ensuring you and your family don’t find yourself in a position where you’ve had to use all of your savings, missed payments with creditors and utilities, getting yourself into serious debt, and you can focus on getting better without feeling pressured to rush back too early.

Trusts

Putting your life insurance policy in a trust is one of the most important parts of the process and is completely free of charge! When someone passes away, their life insurance policy naturally becomes part of their estate. Beneficiaries such as family members, are not able to access anything within the estate until the inheritance tax is paid, and quite often the inheritance tax is quite a substantial amount of money which someone may not have, especially whilst dealing with the grief of losing a loved one. By putting your policy in trust, this will ensure the life insurance remains outside of your estate. You will add a trustee to the trust, who will be able to access the life insurance immediately. By doing this, you can ensure your family won’t have the additional burden of finances whilst grieving.

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