Protection is essential to protect you and your family should something unforeseen happen.
Picture in your mind your current lifestyle. What do you like to spend your money on? It could be days out, dinner with friends or family, holidays. What nice to have bills do you spend your money on? It could be Netflix, Spotify, gym membership or a car loan. What essential bills to you have to spend your money on? Probably rent or your mortgage, utility bills, communication bills, food shopping, petrol and so on.
Now imagine you become ill. You can’t work. Maybe you can’t work for a couple of weeks or maybe you can’t work for 6 months. How are you going to keep topping up your bank account to pay your bills? How are you going to maintain your current standard of living? How will it affect your mental health?
Protection is not only important for those with a mortgage, but for everyone over the age of 18 regardless of their living arrangements.
Life Insurance
Life insurance, also be known as Term Assurance, does what it says on the tin! A lump sum is paid out tax free on death to
your beneficiaries with some policies also paying out on the diagnosis of a terminal illness.
We normally recommend putting the policy into trust as not only does this mean the monies don’t form part of your estate
and Inheritance Tax, but it will also pay out immediately rather than having to wait for probate.
Whole of Life Insurance
Whole of Life is designed to provide a sum of money (the sum assured) to a customer’s family or estate when the customer dies,
regardless of when they die, providing the payments are kept up to date during the policy. As there is no term end day it tends
to be more expensive than life insurance.
Critical Illness Cover
Critical Illness Cover (CIC) pays out a lump sum when the policy holder is diagnosed with one of the insurer’s critical illnesses. A decent policy should ideally have a minimum of 40 different critical illness and many policies also have enhanced cover too which includes additional illnesses and child cover. The money can be spent as you see fit.
Income Protection
This cover underpins most things as it will pay a large proportion of your gross monthly salary should you not be able to work due to accident or illness. After all there is no point in renting your property or having a mortgage if you can’t pay them, or your other bills, if you are unable to work.
If you are employed you may be eligible to Statutory Sick Pay (SSP) from the government. Any idea how much this is? Only £109.40 for up to 28 weeks for a full time employee. That’s £474.07 a month. This wouldn’t even cover most people’s rent or mortgage let alone any of their other bills.
Unfortunately, if you are self employed and unable to work there is no government help available.
Most Income Protection claims are for muscular skeletal (bad back) or mental health problems, especially stress.
With the average family not having enough ‘emergency’ money put aside to pay one month’s worth of bills this is why we think Income Protection cover is so important.
Family Income Benefit
Family Income Benefit (FIB) provides a regular income to your beneficiaries after your death. Great for those with a family. Like all insurances, there are lots of different options to consider.
Business Cover
For those with a limited company or partnership there are many benefits to putting the previously mentioned protection policies in your business name rather than your personal name, including saving tax.
In addition to the general protection such as Life Insurance, Critical Illness Cover and Income Protection, there are many insurances designed for businesses such as Share Holder Protection.
General Insurance
General Insurance insuring your buildings and contents against the major perils such as fire, theft, storm damage etc. If you have a mortgage it will be part of your mortgage offer that the buildings is insured at exchange and although not essential it is a very good idea to have your contents insured at completion. If you are buying a leasehold property such as a flat, your maintenance agreement is likely to have this included. It would be prudent to have your solicitor check this before exchange.
Buildings insurance covers everything fixed to the property including sanitary ware.
If there was a fire in your property which destroyed EVERYTHING, would you be able to replace everything with the money you have saved? If the answer is no, then it’s important you take out contents insurance.
