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Category : Income Protection

Critical Illness

How to prepare financially for long-term illness

While British life expectancy continues to rise, the same might not be said for the quality of health we could expect to enjoy as we get older, according to a stark warning from The British Heart Foundation. Their analysis suggests the number of people suffering heart attacks and stroke because of a rise in diabetes diagnoses could rise by 29% over the next two decades.

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Insurance Business

What is insurance?

What is insurance?

Almost every adult in the UK has taken out some kind of insurance policy – whether it’s to protect themselves, their home, their car, their possessions, or their beloved pets. But what is it?

An insurance policy is essentially a contract taken out with an insurer which pays out an agreed sum of money (in the form of an income or lump sum) on a valid claim. You can buy insurance to cover many aspects of life including your income, health, your business, your car etc… Read More

insurance

Self-Employed lack protection

Self-Employed lack protection

Just 4% of self-employed workers have income protection in place, leaving the majority vulnerable to financial difficulties if they are suddenly forced to stop working through illness or accident.

In its survey of more than 9,000 adults, LV= identified the self-employed as a niche group who would struggle to make ends meet if they stopped earning. This is partly down to the fact that they have no employer’s safety net and little, if anything, in the way of emergency funds.

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Income Protection

Barriers to protection

According to an online survey of 2,000 adults by Royal London, half of those surveyed believe life insurance is essential for someone with a mortgage or dependants and yet only 60% of people with a mortgage have life cover.

While 60% of those surveyed with a mortgage have a life insurance policy, just 29% have critical illness cover and 19% have income protection insurance, suggesting that better education is needed to help make people more aware of the benefits of taking out protection.
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Family Cycle

The value of protection

Buying a new home is possibly one of life’s biggest and most exciting events. It’s also a major financial commitment – one that could be with you for 25 years or more.

Your ability to maintain your mortgage payments relies on a constant income, so how would you continue to make your mortgage repayments if your income was reduced – or stopped? Here we look at two similar scenarios with very different outcomes.
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Life Insurance

Peace of mind for the cost of a coffee

Peace of mind for the cost of a coffee

Many of us pick up a morning coffee on the way to work – it’s a little bit of luxury to start the day for just a couple of pounds. But did you know you could provide something even more satisfying for you and your loved ones for less than the cost of that coffee?

Peace of mind
Protection insurance (or, more specifically, life insurance, critical illness cover and income protection) should be considered essential – especially if you have a mortgage, or people who depend on your income.

A life insurance policy can provide much-needed funds if you’re no longer able to work through illness, injury, or worse. There are even some policies that will also cover you for unemployment. Cover provides peace of mind because you know you and your family will be financially supported if the unexpected happens – and cover might be cheaper than you think.

When it comes to a claim…
If you’ve declined the offer of protection insurance in the past because you don’t believe your insurer would pay out, think again. According to the Association of British Insurers (ABI), 97.3% of all protection insurance claims paid out in 2016, totalling £4.7bn. That’s around £13m a day paid to households hit by the emotional and financial distress and disruption that an unexpected accident, serious illness or death can cause.

Things change – and so should your cover
Even if you already have one or more of these types of plans in place, it’s still important to regularly review your cover levels. Personal circumstances can change and you should make sure your level of cover remains appropriate.

Choose security
Next time you’re in the queue wondering whether to go for a flat white or hazelnut mocha, why not consider a third option and choose long-term financial security for you and your loved ones. The satisfaction it can provide you is far greater than that from a coffee.

Based on latest data, a 35-year-old non-smoker looking for £250,000 decreasing life assurance and critical illness to cover a 25-year repayment mortgage, could pay a premium of £58.54 per month, equivalent to £1.88 per day based on a 31-day month.

Figures correct as at 7/8/2017

If you’d like more information on what sort of protection insurance would suit your circumstances, please get in touch.

Family Cycle

Protecting your mortgage repayments

Protecting your mortgage repayments

We think protection advice is imperative when you have a home or family you want to protect. So, talk to us about a mortgage and we’ll talk to you about life cover.

Buying a house could be one of the biggest financial commitments you’ll make: getting a deposit together
can wipe out your savings and paying your mortgage will take a chunk out of your income. So how would
your family continue to meet this commitment if you stopped earning?

When taking out a mortgage, it’s essential to consider how you would continue to cover your mortgage
payments if you fell ill or died unexpectedly. There are a number of ways you can do this:

Life Insurance
If you died suddenly, a Life Insurance policy would pay out a cash sum to your dependents. They could
use this to pay off their mortgage and keep the roof over their heads.

Mortgage Payment Protection Insurance (MPPI)
Also known as Accident Sickness and Unemployment (ASU) cover, MPPI covers your mortgage related
repayments if you can’t work because of redundancy, accident or ill-health. Benefits are usually paid for 12
months although some providers offer 24 months’ cover.

Critical Illness Insurance
Critical Illness Insurance pays out a lump sum if you’re diagnosed with a specified critical illness such
as cancer, stroke or heart attack. You can use the cash payout to clear your mortgage, pay for medical
treatment, take time to recuperate or anything else you choose.

Income Protection
Income Protection can replace part of your income if you’re unable to work for a long time due to illness
or disability. It will pay out until you return to work or the policy ends – whichever happens first. Income
Protection plans usually have a waiting period before the benefit becomes payable.

Choosing to protect yourself

When you take out a mortgage through us, we’ll ask if you want to take out protection as well. What’s more, we will analyse your lifestyle and any protection shortfall and recommend a protection plan that will help protect you and your family from the financial consequences of serious illness or death.

Plugging the protection gap

Plugging the protection gap

If you’re one of the increasing number of people who’ve become self-employed in recent years, you may have found the switch has left you without the employee benefits you previously took for granted.

Making the change from employed to self-employed is a big step and it’s one more people are taking.
The number of self-employed people in the UK now stands at 4.80 million, representing 15% of the working population.

But while some may find they can earn more as a result, they might overlook the importance of replacing lost employee benefits like income protection and life insurance.

Death in Service
Many employed people automatically benefit from life insurance arranged on their behalf by their employer. This would pay a multiple of their annual salary were they to die while still employed, which could then be used to pay off a mortgage or maintain their family’s lifestyle.

Some employees receive a proportion of their salary for a period of time if they become unable to work due to illness or injury (over and above statutory sick pay levels) and may benefit from access to private medical treatment.

Clearly, moving from employment to self-employment would mean these benefits cease, and potentially
leave a protection ‘gap’.

Mind the gap
Fortunately, the benefits you may have received automatically as an employee are also available to you as a self-employed individual – and they may be more affordable than you think.

Income protection insurance will pay you a monthly income if you become unable to work through illness
or injury. Self-employed workers should consider this an essential piece of protection because it can help
prevent your family suffering financial hardship and allow you space to recover more quickly without the
burden of financial worry. Many insurance companies also provide support for customers to help them return
to fitness as quickly as possible.

Life and critical illness plans can be individual plans or combined. Life insurance will pay out a lump sum or
a regular income to your dependants if you were to die during the term of the cover. Critical illness plans pay out a lump sum if you are diagnosed with a specific illness. Both can help secure your family’s financial future.

Private medical insurance (PMI) may be considered less of a priority than either income protection or life
insurance, given the treatment you are entitled to via the NHS. For those seeking to replicate all the benefits
they may have enjoyed when employed, there are a range of policies available at varying price levels. If you are interested in PMI we can introduce you to our PMI referral partner.

Are you covered?
If you’re self-employed it’s easy to make sure your employment status doesn’t put your long-term financial
security – and that of your family – at risk. Get in touch to discuss your protection options.

Money worries

Just about managing

Just about managing

Two thirds of working households in the UK consider themselves to be ‘just about managing’ financially, according to research.

The Resolution Foundation, which researches the living standards of those on low to middle incomes, has identified six million Jams (as they have become known) spread across Britain. Jams tend to have at least one person in work and most work full-time. Some will earn higher salaries, but typically they will be low earners receiving top ups from the welfare state, such as tax credits.

A priority for the government?
In her first speech as Prime Minister, Theresa May addressed the Jams directly, suggesting that the government would be working hard to help improve their lot. But the impact of years of flat wages, coupled with cuts to working-age benefits and increased rental and property prices, makes this is a huge issue to tackle.

What’s more, the Institute of Fiscal Studies suggests that the weak growth will continue, which means the situation won’t get easier for these families in the short-term.

The increasing financial pressure the Jams are under is worrying, and an unexpected change in circumstances could make their situation a lot worse. What would happen if the main breadwinner was to lose their income, or fall ill and have to take time off work?

If you’re in this situation, the first step is to understand what you’ve got coming in and how you’re spending your money. Once you’ve got your budget under control you can look for ways to save money and, if you can afford to, consider how you might protect your income in the event of sickness, ill-health, or worse.

Just about managing
Two thirds of working households in the UK consider themselves to be ‘just about managing’ financially, according to research.

JAMs tend to:
• over two thirds have have less than a month’s salary in savings
• spend 24% of their income on housing
• three quarters are likely to be in rented accommodation
• have at least one person in work
• have at least one child

If you’d like help with your financial planning, please get in touch.