Protecting against the unexpected

Putting steps in place to protect your standard of living, and that of your family

Whatever happens in life, we can work with you to make sure that you and your family are provided for. Premature death, injury and serious illness can affect the most health-conscious individuals and even the most diligent workers can be made redundant.

One important part of the wealth management process is to develop a protection strategy designed to remain relevant to your situation. We can help you put steps in place to protect your standard of living, and that of your family, should an unexpected event occur. We achieve this by assessing your existing arrangements and providing you with guidance on how to protect your wealth and family.

With so many different protection options available, making the right decision to protect your personal and financial situation can seem overwhelming. There is a plethora of protection solutions that could help ensure that a lump sum, or a replacement income, becomes available to you in the event that it is needed. We can help you make sure that you are able to take the right decisions to deliver peace of mind for you and your family in the event of death, if you are too ill to work or if you are diagnosed with a critical illness.

You can choose protection-only insurance, which is called ‘term insurance’. In its simplest form, it pays out a specified amount if you die within a selected period of years. If you survive, it pays out nothing. It is one of the cheapest ways overall of buying the cover you may need.
Alternatively, a whole-of-life policy provides cover for as long as you live.

Life assurance options
Whole-of-life assurance plans can be used to ensure that a guaranteed lump sum is paid to your estate in the event of your premature death. To avoid inheritance tax and probate delays, policies should be set up under an appropriate trust.

Level term plans provide a lump sum for your beneficiaries in the event of your death over a specified term.

Family income benefit plans give a replacement income, over a specified period, for beneficiaries on your premature death.

Decreasing term protection plans pay out a lump sum in the event of your death to cover a reducing liability for a fixed period, such as a repayment mortgage.

Simply having life assurance may not be sufficient. For instance, if you contracted a near-fatal disease or illness, how would you cope financially? You may not be able to work and so lose your income, but you are still alive so your life assurance does not pay out. And to compound the problem, you may also require additional expensive nursing care, have to adapt your home or even move to another, more suitable property.

Income Protection Insurance (IPI) also known as Permanent Health Insurance, would make up a percentage of your lost income caused by an illness, accident or disability. Rates vary according to the dangers associated with your occupation, age, state of health and gender but IPI is particularly important if you are self employed or if you do not have an employer that would continue to pay your salary if you were unable to work.

Critical illness insurance is a long-term insurance policy designed to pay you a tax-free lump sum on the diagnosis of specified life-threatening or debilitating (but not necessarily fatal) conditions, such as some forms of heart attack, stroke, certain types/stages of cancer, multiple sclerosis and loss of limbs. A more comprehensive policy will cover many more serious conditions, including loss of sight, permanent loss of hearing and a total and permanent disability that stops you from working. Some policies also provide cover against the loss of limbs.

The illnesses covered are specified in the policy along with any exclusions and limitations, which may differ between insurers. Critical illness policies usually pay out only once, so are not a replacement for income. Some policies offer combined life and critical illness cover. These pay out if you are diagnosed with a specified critical illness, or you die, whichever happens first.

Accident, Sickness and Unemployment (ASU) can be taken out for any purpose to protect your income and give you peace of mind. The benefits only pay for 12 to 24 months on a valid claim if you have an accident, become ill or unemployed. Most of these protection policies operate a ‘deferred period’, which is the period from when a claimable event happens to when the policy starts paying out.

Private medical insurance covers you for private medical treatment and you can choose to add on extra cover, such as dental cover. You may select the hospitals where you would want to be treated close to home. As always, the more benefits and the more comprehensive the policy you select, the more it will cost.

Beyond taking the obvious step of ensuring that you have adequate insurance cover, you should also ensure that you have made a will. A living will makes clear your wishes in the event that, for example, you are pronounced clinically dead following an accident, and executes an enduring power of attorney, so that if you become incapable of managing your affairs as a result of an accident or illness, you can be reassured that responsibility will pass to someone you have chosen and trust.

You should receive professional advice on IHT planning as part of writing your will. Simple measures could save your beneficiaries significant amounts in tax.
Of course, all these protection options also apply to your spouse and to those who are in civil partnerships.