Act now to ensure you remain protected
Making sure you and your family are financially protected should something unexpected happen is one of the most valuable things you can do and will help you avoid a financial crisis.
If you’ve ever turned down a recommendation of critical illness because you can’t see the value of it, this real-life case study might make you think again.
Peter Simpson is a successful commercial manager for a Berkshire-based firm. He’s married with three children aged 13, 11 and 9 and has a £297,000 mortgage. His wife gave up work to bring up the kids, making Peter the main breadwinner.
When he was 24, buying his first house, Peter had arranged to see an Openwork adviser who helped him sort out a mortgage and critical illness cover. Over the years, Peter’s circumstances changed; he got married, started a family and moved up the housing ladder. During that time he has stayed close to his adviser and updated his cover in line with his changing circumstances.
The value of critical illness cover
Peter has always been able to see the value of critical illness cover, particularly because his father had sadly died of cancer. Aside from covering his mortgage, Peter also wanted to make sure his wife and children would be OK financially if anything happened to him.
In December 2016, totally out of the blue, Peter had a stroke. He had stopped at a friend’s house on the way to work when he suddenly and unexpectedly experienced a terrible buzzing sensation at the back of his head. He lost the feeling in his right-hand side and his speech became slurred. Spotting something was obviously very wrong, his friend got him into the house and immediately called an ambulance. Within 45 minutes Peter was being treated in hospital with his wife by his side.
When he was back home recuperating, Peter started the claims process, which turned out to be extremely straightforward. After a few phone calls and emails Peter received confirmation that his policies would pay out in full and he could expect £380,000 in his bank account.
Avoiding the financial impact of serious illness
Thanks to careful financial planning and an appreciation of the difference a critical illness plan can have on the financial impact of a serious illness, Peter and his family now have the freedom to make choices.
They have been able to make two platform investments, one that would act as a pension for Peter’s wife, and the other to enable Peter, a higher-rate tax payer, to maximise his personal allowance every tax year. They have also reduced their mortgage and swapped it from interest only to repayment.
This case study highlights the importance of protection especially if you have a loan or you’re the main breadwinner.
Please talk to us if you think you need cover, or you need to update your existing provision.
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.
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.
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:
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 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.
Have you upgraded your mobile phone in the past two years?
If the answer’s yes, your choice may have been driven by a change in your needs or wants. Perhaps you opted for a better
deal, a different contract, or a handset with new features that weren’t available with your previous model?
When it comes to updating your phone TV or even your car we all want to feel like we’re getting a good deal.
The question is: why don’t more of us do this with items like the financial products we pay for every month?
Are your current arrangements still right for you?
Take critical illness insurance as an example. If you have a critical illness policy:
• When did you last update it?
• Does it still provide the cover you need?
• Does it continue to provide the benefits and features you need?
When your needs change, it makes sense to update things
Life may have changed since you last bought or reviewed your critical illness insurance cover. You may have had children, moved house, or your income may have changed.
This means that even though you have a critical illness plan in place, it might not offer you the level of cover you’d need if the unexpected happened. However, it might also provide cover for certain conditions which may not be available on a new plan.
It’s not just mobile phone companies that compete to offer the most innovative products – insurance companies are constantly updating their products to reflect customers’ changing needs too.
Given that more of us are living longer and surviving serious illnesses like cancer it is perhaps unsurprising that products like critical illness insurance have changed in recent years. For instance, many insurers have introduced greater flexibility and extended their cover to cater for a wider range of illnesses. Some have even introduced completely new products offering partial pay-outs, or for an additional cost, allow you to claim for non-critical illnesses and injuries.
Protect your loved ones
Critical illness insurance can help you cover mortgage or rent payments, treatment, or any home alterations you may need to make as a result of an unexpected critical illness – so it’s important your cover remains up-to-date.
We can review your needs and make sure you have the right cover in place. To arrange your review, please get in touch
Millions of pet owners have purchased insurance in case of an expensive trip to the vet’s, but who will pick up the bill if something happens to you?
Many pet owners will know the stress and financial burden caused by an expensive vet’s bill and have taken out pet insurance to avoid having to make difficult decisions at stressful times. In fact, figures show 3.9 million dogs and cats are covered by pet insurance.
However, it seems we place more value on our pet’s wellbeing than our own, with almost 8.5 million people in the UK potentially needing some sort of insurance cover, having none.
Why aren’t we insuring ourselves?
One in four breadwinners does not have life insurance in place, risking leaving their families in financial difficulty if they were unable to work – or worse, died. It seems women are in a worse position than men, with 38% protected by some sort of policy, compared to 45% of men.
So what is it that puts us off buying insurance? Perhaps it’s the thought of paying out each month but not seeing any benefit from the cover.
Far from being a luxury, protection insurance should be considered essential. If you suffered a serious illness or injury you may lose your income, and this could lead to you losing your home. Similarly, if you died, would your loved ones be able to maintain their current lifestyle without your income?
If you think it’s not going to happen to you, you may be surprised to know:
• half of people in the UK born after 1960 will be diagnosed with some form of cancer during their lifetime
• In 2015/16 8.8 million working days were lost due to musculoskeletal disorders
• there are up to 175,000 heart attacks in the UK each year
Insurance policies can provide funds to help deal with the financial consequences of illness, an accident, unemployment or death. Whether that’s to help pay the mortgage, maintain your family’s lifestyle, or even help pay for medical treatment or specialist nursing support.
The next time you’re renewing your pet insurance, check our own level of cover too.
If you’d like more information on the types of cover available and whether they are suitable for you, please get in touch.
Contact us today for a Life and Protection Insurance review
When it comes to protection insurance, we hold two firm beliefs:
1. it should form the foundation of your financial plan.
2. cover should be reviewed regularly to make sure it continues to meet your needs.
The latter is particularly important when you are at a particular ‘life stage’. Whether that’s buying a house, getting married, starting a family, setting up in business, or all of the above, protection insurance will help to protect your loved ones and your financial responsibilities.
So what type of cover is right for you?
• Term Insurance pays out a lump sum if you die within the agreed ‘term’ (the amount of time you have chosen to be covered for, eg. 20 years). Suitable for mortgage protection or while children are financially dependent on you.
• Whole of Life Insurance pays out a lump sum when you die, whenever that is, as long as you are still paying the premiums. Suitable for estate planning or to cover things like funeral expenses.
• Critical Illness Insurance pays out a tax-free lump sum on the diagnosis of certain life-threatening or debilitating conditions, like cancer, heart attack or stroke. You may decide to buy Critical Illness Insurance when taking on a major commitment, like a mortgage or starting a family, but it can be bought at any time to provide peace of mind.
• Income Protection Insurance pays out a regular, tax-free income if you become unable to work because of illness, injury and some policies cover unemployment. It could help you keep up with your mortgage or rent payments, as well as other living costs, until you’re able to return to work.
Things change – and so should your cover
You may already have one or more of these in place, but it’s still worthwhile reviewing your current cover levels – especially if your circumstances have changed. Ask yourself:
Whether your family could cope financially if either you or your spouse/partner died?
How much income would you have if you were taken seriously ill and couldn’t work?
Would your business survive without you or your key people?
How would your lifestyle change if you had an accident and couldn’t do the things you do today?
Contact us today for a Life and Protection Insurance review
Keeping your heart healthy
Dementia and Alzheimers have replaced heart disease as the leading cause of death in England and Wales, but the latter still accounted for 11.5% of all deaths in 2015. In fact, every three minutes someone in the UK has a heart attack and 30% of those are fatal.
The good news is there’s a lot you can do to keep your heart healthy.
Watch your weight
Research shows keeping to a healthy weight cuts your risk of heart disease. The British Heart foundation offers support on eating well and being physically active which can help you manage your weight and keep your heart healthy. Find out more at www.bhf.org.uk
Smokers are almost twice as likely to have a heart attack compared with those who’ve have never smoked. It’s a difficult habit to break, but stopping smoking is the single best thing you can do for your heart’s health. If you smoke:
• ask your doctor, practice nurse or pharmacist for advice on how to stop.
• make a date to give up and stick to it.
• tell your family and friends that you’re quitting and ask for their support.
• keep busy to help take your mind off cigarettes.
Don’t drink too much
Drinking more than the recommended amount of alcohol can also have a harmful effect on your heart and general health. If you drink alcohol it is important to keep within the guidelines and drink no more than 14 units each week.
Manage cholesterol, diabetes and high blood pressure
If you have too much cholesterol in your blood, have diabetes or high blood pressure, this can increase your risk of heart disease and other cardiovascular diseases. Eating healthily and exercising regularly can help lower cholesterol, reduce your risk of developing type two diabetes and reduce blood pressure.
Get financial protection
Life and Protection Insurance offers a financial safety net for you and your loved ones, should heart disease strike. In fact, Scottish Widows recently revealed that heart-related disorders were the second only to cancer as the most common reason for a policyholder to claim on their life cover and critical illness plan. They can provide a regular income or cash payout to ease the financial burden caused by serious illness or untimely death:
• Life Insurance can provide financial security to those who depend on your income when you die. It could pay off your mortgage, or provide an income to help cover things like regular household bills
• Critical Illness Insurance pays out a tax-free lump sum on the diagnosis of certain life-threatening or debilitating conditions, like cancer, heart attack or stroke.
• Income Protection Insurance pays out a regular, tax-free income if you become unable to work because of illness, injury, and in some cases, unemployment. It could help you keep up with your mortgage or rent payments, as well as other living costs, until you’re able to return to work.
You may already have one or more of the above in place, but it’s still worth reviewing your current cover levels. Personal circumstances can change regularly so it’s important to ensure your level of cover remains appropriate.
• Average price of a semi-detached house in the UK = £219,255.
• Cost of raising a child to age 21 in the UK = £231,843.
You’ve insured your home, but how do you go about insuring your kids?Obviously costs change as children grow up, but from birth to 21 £231,843 equates to a monthly cost of £878.
• Childcare & Babysitting £70,466
• Education £74,430
• Food £19,004
• Clothing £10,942
• Holidays £16,882
• Hobbies & Toys £9,307
• Leisure & Recreation £7,464
• Pocket Money £4,614
• Furniture £3,408
• Personal £1,130
• Other £14,195
59% of parents said they are struggling to manage outgoings including childcare, which amounts to nearly a third of the total cost of raising a child. Surprisingly though, 49% of parents do not have a plan in place for a sudden loss of income resulting from things like a critical illness or even the death of a parent.
Even after 21 the costs keep adding up and parents are still spending £1,113 a month on things like education
and food. Today, the overall cost of a three-year degree (including tuition fees, accommodation and living expenses), is typically between £35,000 to £40,000.
Marriage can be a costly option for those who choose it, with the average wedding estimated to be £20,000. Getting a foot on the property ladder is another growing cost for the next generation. The typical first-time buyer borrows over 3.39 times their income with a deposit of 17% and we’ve all heard of the Bank of Mum and Dad.
What would you do if you suddenly lost the income that pays for your child-related expenses?
• protect your earnings: income protection gives the assurance that you and your children will be provided for if you can’t work because of an accident or sickness
• protect your health: critical illness cover pays out a tax-free lump sum on the diagnosis of certain life-threatening or debilitating conditions, like cancer, heart attack or stroke
• insure yourself: life insurance can provide a lump sum payment on death that can help those left behind continue raising the children
Talk to us about protecting yourself, your income and your family both now and in the future.