Protection

Many clients don't consider life cover until it comes to buying their first property. Understandably, the mortgage is the most exciting part of the process as this ultimately facilitates being able to take your first step on the ladder.

What is equally important, however, is taking the right steps to ensure that you have adequate resources in place to stay there. Illness or injury that prevent you from working could quickly see any savings dry up, and not everyone has expansive cover provided by their employer.

Each client's needs are different and a policy that suits one may be not be the best solution for another. Our advisors are on hand to conduct a full assessment of your circumstances to help mould a plan to your individual requirements. Below is a list of the most common policy types we encounter, along with a brief overview.

Term Assurance

Term assurance is the most common and typically most cost-effective form of life cover. The sum insured will pay out on death or diagnosis of terminal illness and can be arranged on an increasing, decreasing or level basis.

Increasing cover can be a set percentage (e.g. 3%) or linked to inflation each year, and your premiums will increase as well as the assured amount. Decreasing cover is ordinarily arranged in conjunction with a repayment mortgage and is designed to decrease in line with your mortgage balance to ensure it’s always fully protected.

Critical Illness

Income Protection

Income Protection is a policy designed to replace lost income should you be off work for an extended period due to illness or injury. Current statutory sick pay entitlement is £116.75 per week, which in many cases would be insufficient to meet ongoing household costs.

An income protection policy will pay out the insured benefit amount each month, free of tax. Each provider has their own limits regarding pay out amounts, but you can most commonly expect to apply for 50-65% of your pre-tax earnings.

When applying for an IP policy, you will decide between level and increasing cover as well as your deferred period. The deferred period is the amount of time between initially being off work and the monthly benefit being paid. You can generally choose a period of 1-12 months, the longer the deferred period the cheaper your monthly premium.

There is also a choice between short and long term cover. Short term policies are generally pay out for a maximum of 12 or 24 months. Long term policies will pay out for the full term of the cover but are more expensive as a result. You can usually claim more than once on an IP policy but may be required to return to work for a period between claims.

This type of policy also has several optional extras depending on chosen provider. If you have an IP policy in conjunction with another product, these extras only need to be added once.

Other

Family Income Benefit provides dependents with a monthly income should you pass away. The cover can either be level or increasing, to ensure the monthly benefit retains value with inflation, and is able to provide a cost-effective solution for young families in particular wanting security of an additional income stream. Some providers also give the option to commute payments into a lump sum pay out.

Whole of life insurance and over 50's plans are similar in type to term assurance, but don't have a specific term as the policy only ends when you die.

A critical illness policy pays out a lump sum in the event of a specified illness. It can be taken out either as a standalone policy or in conjunction with another product. The number of conditions and pay outs vary depending on provider, with the most common qualifying conditions being heart attack, stroke or cancer diagnosis. There are also providers who allow for multiple claims to be made under the same policy, based on the severity of the illness or injury.

Many providers allow children's cover to be included, with fracture cover and waiver of premium being widely available too. Other add on's include virtual GP services or global treatment cover, your advisor can explain the merits of these when discussing your cover requirements.