Protection Plans

Protection Plans

Protection Plans - Life Assurance

Life Assurance

What is Term Assurance?

Term Assurance can pay a tax-free lump sum in the event of death during a specified period in return for a fixed monthly, or annual, premium. At the end of the term the policy finishes and there is no maturity value. As a result this is the cheapest and simplest form of life cover available. The main forms of Term Assurance are:

  • Level - provides a lump sum, which will remain constant during the term of the plan.
  • Decreasing - provides a lump sum, which decreases during the term of the plan.
  • Convertible - provides the option to convert to a whole of life or endowment assurance regardless of the assured’s state of health at the time of conversion.
  • Renewable - provides the option to effect another term assurance at the end of the term, irrespective of the life assured’s state of health.
  • Family Income Benefit -This is paid as an income, payable monthly, quarterly or annually, from the date of death until the end of the term.

What is Whole of Life Assurance?

Whole of life - Provides a sum assured on the death of the life assured, whenever it occurs.
The different types of whole of life policies are:

  • Without Profits polices - These provide a guaranteed sum assured at the death with no bonus additions.
  • With - Profits polices - These provide a guaranteed sum assured and a share of the investment profits of the life fund.

What other cover can be included with my life cover?

Critical Illness - is a separate Insurance all together, but can be an optional extra under all Term Assurance Plans which allows for the lump sum to be paid not only on death, but also in the event of diagnosis of certain critical illnesses, such as Heart Attack, Stroke, Major Organ Transplant, Blindness, Total & Permanent Disability etc. (To find out more about Critical Illness Insurance, please click here).

Terminal Illness - The sum assured will pay out if you are diagnosed as having less than 12 months to live - in simple terms, payout in advance of death. Most providers include terminal illness as standard with no additional cost. It should not be confused with critical illness, which is an entirely different benefit.

Which Policy do you need?

Term Assurance is appropriate for temporary protection needs only:
Family cover on holiday
Family cover until the children have grown up and cease to be a financial responsibility.
Life cover linked to the repayment term of a mortgage or other loan
Seven year polices to cover IHT (Inheritance Tax) on potentially exempt transfers

Level term assurance is suitable for:
(A) paying off a debt on death within the term.
(B) providing capital for an investment to produce an income replacing that lost on the death of the life assured.

Decreasing term assurance is useful for paying off debts, which are being repaid over the term or where dependents become self-sufficient.

Renewable and convertible term assurance provide a solution if permanent assurance is required but is presently unaffordable and provides the option to convert to a permanent policy within the original term without evidence of health.

Family Income benefit is useful for young families with limited incomes and high protection needs.

Whole of life polices are generally used to protect an investment over the assureds whole life.

Without profits polices are suitable for covering fixed liabilities.

With Profits polices provide bonus additions to the sum assured.

Why do I need life assurance?

The life cycle:

The vulnerable years are the early years of marriage or the starting of a family. Protection needs are high. Income tends to be low and expenses high. The death of either partner could result in a need to preserve the family’s standard of living.

The relaxed years tend to begin in a couple’s 40s as income increases and the need for protection decreases as children become financially independent. Retirement provision and other savings increase in importance. However, protection needs may still remain, as the death of either partner could leave the survivor in financial difficulties.

There are four main factors which influence protection needs: -

Age
Parent’s normally provides for the financial needs of children until they start working. If either parent dies, provisions need to be made for the cost of caring for the children.
During the mid 20’s to early 40’s, most people find partners and raise a family. During this period the major need is to protect the income against death or disability of either parent.

Dependents
The number and age of your dependents affect the need for protection. A dependant adult needs to be covered against the loss of income from a death of the provider. Dependent children need protection until they become financially independent.

Income
The size of the income required to meet needs and expectations determines the amount of cover required. This can be arrived at by applying a multiple to the person’s current income minus any state benefits; pension scheme benefits, existing life cover and cost savings arising from death.

Financial liabilities
As well as taking account of existing assets and income sources, it is vital to take account of present and future liabilities, such as loans and mortgages.

How much will it cost?

Life assurance premiums have fallen steadily as medical science has increased life expectancy.

For more information or a no-obligation quotation, please email us or telephone us on 01844 261283. One of our financial advisers will be happy to help you.

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Protection Plans - Income Protection

Income Protection

What is Income Protection Insurance?

Income protection (IP) insurance pays a regular tax-free income (calculated as a percentage of your salary) if you are unable to work due to an accident or illness. It will continue to pay out as long as you are unable to work - be it months or years. Income protection is also called Permanent Health Insurance. (PHI)

Why does the job I do make a difference?

The likelihood of accident or illness may vary from job to job and premiums will vary to reflect this. Here are some of the risk categories.

Very safe: - accountant, librarian, secretary, barrister

Fairly safe: - baker, dog breeder, post worker, midwife

Fairly risky: - teacher, gunsmith, plumber, farmer.

High risk: - bricklayer, plasterer, timber merchant, and landscape gardeners.

Many occupations are at even higher risk than these

Will the policy pay out the whole time I am off sick?

Payments continue for as long as the insurance company believes you are unable to work. Regular reports from your GP may be necessary.

How is "unable to work" defined?

When taking out a policy you can choose which of the following definitions will be used to assess a claim if you become ill.

Own occupation: -You can claim if you can no longer do your own job.

Any suited occupation: - You can claim if you are unable to follow your own or another occupation suited by training or experience.

Any Occupation: -You can claim if you are unable to perform any occupation.

Work tasks: - This is offered as a more understandable alternative to “Own occupation”. You can claim if you cannot perform a number of the everyday work tasks, such as walking, lifting and hearing.

Activities of daily living: - You can claim if you cannot perform a number of everyday living tasks, such as, dressing, washing or using the toilet.

How much does the policy pay out?

Payouts are based on your actual salary and are unlikely to pay more than 75% of your gross annual earnings less state benefits. This is to make sure you have an incentive to return to work. (If applicable)

Why do I need income protection?

You may believe that you can reply on the state to claim benefit in an event of an illness or accident. 900,000 people applied for state incapacity benefit last year, 400,000 were turned down, as they had not contributed enough to qualify for benefit in the last two years.

To qualify for Statutory Sick Pay (SSP) you must be off sick for at least 4 days in a row and earn at least £75 a week. The benefit is payable for 28 weeks in any one spell of sickness. You must return to work for at least 8 weeks before a new spell starts.

SSP will pay £63.25 per week

Income protection will pay 75% of your annual gross earnings less state benefit.

How much do you need to pay the bills?

Income Protection Insurance Key Facts

Income protection (also known as Permanent Health Insurance or PHI) will pay out regular, tax-free income if you are unable to work as a result of an accident or illness.

The policy will not pay out if you are made redundant

The insurance benefit should not exceed 75% of earnings (some providers may deduct state benefits from the benefit amount.)

The policy will pay out until you return to work or until normal retirement age, whichever is earliest.

Income protection polices cannot be cancelled by the insurer, regardless of the number or length of claims.

How much will it cost?

You may select the “waiting” period between incapacity and payment (4, 13, 26 weeks are common periods) the premium cost reduces as the waiting period lengthens.

For more information or a no-obligation quotation, please email us or telephone us on 01844 261283. One of our financial advisers will be happy to help you.

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Protection Plans - Private Medical Insurance

Private Medical Insurance

What is Private Medical Insurance?

Private medical insurance provides private medical treatment in event of an injury or illness. It covers the cost if surgery, specialists, accommodation and nursing at private hospitals or in a private ward in an NHS hospital.

What am I covered for and what is not included?

Medical insurance is designed to cover treatment for illness or injury. A standard or basic scheme will usually cover in-patient or day care treatment, post hospital treatment, nursing at home, emergency dental and complications of pregnancy. It will not cover outpatient, routine maternity or dental costs. A comprehensive scheme will cover all the above plus outpatient care and specialists, complementary care, routine dental (sometimes) and generally have higher budget limits than a Standard plan. Most plans exclude pre-existing conditions.

Do I need to provide health evidence to take out PMI?

If in doubt, declare it. Not all conditions are covered and some previous illnesses or treatments may be excluded. Insurers may therefore ask for a medical history questionnaire to be completed, or may write to your doctor, or ask you to undergo a medical examination.

Why have Private Medical Insurance?

Although the NHS is an excellent provider of general treatment and care, waiting lists for non-life threatening conditions can be long. You will have choices, such as location of hospital, quality of accommodation, consultant and surgeon, time of treatment.

Polices providing cheaper cover with fewer options may be important if you have limited resources. Speed of treatment is usually the most important aspect, particularly if you are self-employed.

How do I obtain a quotation?

For more information or a no-obligation quotation, please email us or telephone us on 01844 261283. One of our financial advisers will be happy to help you.

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Protection Plans - Long Term Care Insurance

Long-term Care Insurance

What is Long-term Care Insurance?

There is no one simple definition of 'care'. Care can range from help in your own home with domestic tasks such as shopping, cleaning or help with managing bills and other paperwork, to providing personal and intimate care such as washing, dressing or feeding either in your home or in a residential or nursing home.

Long-term care insurance is really about allowing older people to retain choice. The choice to remain in their own homes if they want to, to receive quality care in a good nursing or residential home if they need it, or the choice of leaving their assets to the next generation - rather than seeing them used up to pay for care provision not provided by the state.

At what age should I consider Long-term Care Insurance?

The answer will vary according to each individual's circumstances. As a rule of thumb, the earlier anyone buys cover, the cheaper it will be. A sensible time to consider your options might be when you start to make financial plans at retirement.

What are ADLs?

ADL stands for Activities of Daily Living. These are: -

  • Washing
  • Using the toilet
  • Dressing
  • Being continent
  • Mobility
  • Feeding yourself

Usually a person must not be able to perform at least two ADLs before a claim can be made. The amount to be paid per week or month is chosen at outset. Polices may pay out an increasing percentage of this maximum amount as the number of ADLs which cannot be performed increase.

How much will it cost me?

Premiums may be regular (monthly) or a single ‘upfront’ payment. They will be lower the earlier you start to pay and will be cheaper for men than women, because women have longer life expectancy.

For more information or a no-obligation quotation, please email us or telephone us on 01844 261283. One of our financial advisers will be happy to help you.

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Protection Plans - Critical Illness Insurance

Critical Illness Insurance

What is Critical Illness Insurance?

This pays out a tax-free lump sum on the diagnosis of one of a number of core critical conditions. The list of these varies between insurers but usually includes, Cancer, heart attack, coronary bypass surgery, kidney failure, major organ transplant, multiple sclerosis and stroke.

Why do I need Critical Illness Insurance?

The impact of a critical illness could have major and immediate financial implications for the ill person and their dependants.

What about my life cover, won’t that cover me?

Life assurance and critical illness are two very different types of insurance. However both should be a very necessary part of your financial planning.

Life assurance is very specific; it pays out if you die from a result of an illness or accident whereas Critical Illness insurance pays out when you are diagnosed with one of the specified critical illnesses, so you can gain access to cash at a time when your needs are greatest.

Who is Critical Illness Insurance suitable for?

Because nobody wants to have to worry about money problems if they become seriously ill, everyone would benefit from the peace of mind and protection offered by critical illness insurance.

If the family breadwinner became seriously ill critical illness insurance will relieve financial pressure while the family earner takes time of work.

If one earner in a two-income family becomes seriously ill, Critical illness insurance will provide the extra money you need to be able to pay the bills and any medical treatment required

If one of your children became seriously ill, you would be able to take time off work to look after them, and you’d also have enough cash to cover the extra expenses of medical treatment.

If a business owner or a self-employed person becomes seriously ill, Critical illness insurance could be a vital factor that means your business survives.

How much will it cost me?

For more information or a no-obligation quotation, please email us or telephone us on 01844 261283. One of our financial advisers will be happy to help you.

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