If your loved ones depend on your financial support for their livelihood, life insurance should be an extremely important consideration for you. It can help to ease the potential financial strain on your family and maintain their standard of living, giving you peace of mind that they will be looked after if you were no longer here to do so.
There are different types of life cover, please see a summary of the options available and their potential use:
Term Assurance Policies
These type of policies run for a fixed period of time and often coincide with a the term of a mortgage. You can choose from either ‘Level’ term, meaning the sum assured remains level (the same as when you took the policy out) throughout the term, or ‘Decreasing’term, meaning the sum decreases by a certain amount (based on a chosen percentage) each year. This type of cover is often used to protect a mortgage.
Family Income Benefit
Family Income benefit is designed to provide a monthly income to help towards the household bills and living costs on a monthly basis. Many people have a lump sum policy to repay their mortgage but forget that running a household (especially one with children!) can cost well in excess of the mortgage payment. A monthly income is essential in almost all homes. For many the loss of an earners wage can cause a strain on the household finances. This is also an important consideration if you pay maintenance to an ex partner too, plans can be put in place to ensure this is still paid. The term on these plans can vary dependant on your situation but often run in line with your youngest child’s 21st birthday but there are options to have more long term plans if preferred.
Unfortunately, life doesn’t stop if you get critically ill. For most there are still the every day bills and debts to pay along with looking after the family. Being unable to work and needing help with childcare can be extremely costly with most of the UK having little money to fall back on.
Critical illness plans are designed to pay out a lump sum in the event of a claim. The pay out can be used to help continue affording the household costs, pay for childcare, fund private treatment or even fund last wishes ie a family holiday.
It’s important that relevant policies are placed in trust. This ensures benefits are paid to the people you want and removes funds from your estate, helping to protect against potential inheritance tax liabilities.
We all know that we should have a Will in place but amazingly still, 2 in 3 people in the UK do not have an up to date Will in place and risk their Estate being distributed and possibly even going to the crown on their demise. Dying intestate (not having a valid Will in place) can mean serious consequences for your Estate and family.
We face choices every day of our lives. Some choices we make rationally, some we make emotionally. Making a Will should not only be an emotional choice but a rational one as well. You can help control what you leave even after you are gone and more importantly the protection and care of your family.
Why should I make a Will?
To appoint Guardians for your children – this is vitally important.
If both parents were to die without making a Will it would be the Courts/Social Services who decide where your children are best placed and it might not be with whom you thought would look after and raise your children. By making a Will with Guardians named for your children you can avoid this uncertainty. You should also consider putting in place life insurance to provide for your children in the event of your death. Consider this – it could be very difficult if one day two children turn up on your doorstep expecting to be looked after until they are 18 and there is no money there to fund them!
To control what age your children inherit
To hold assets on behalf of a child until they reach the age of 18 or 25. Doing so allows for the property or money to be properly managed until the children are old enough legally to take possession of it. Some types of trust allow the beneficiary to receive an income from the property.
If you are not married, then you need to make a Will.
There is no automatic transfer of assets between couples who are cohabiting. Other than jointly owned assets, which would pass to the surviving owner on first death in law, all other assets could pass back to the deceased’s family under intestacy rules. In practicality it is unrealistic to expect your deceased partner’s family to come asking for his/her DVD collection but a Will formally arranges your affairs after death and avoids problems later.
If you are separated but not yet divorced.
A Will should be written in view of the divorce going ahead as there is a possibility in law that, in the event of your death, your assets could pass back to your ex-partner. Although you are separated, even if you split up with them years ago, in the eyes of the law your ex-partner may still be entitled to your Estate after your death.
What is Income Protection?
Income Protection provides a regular monthly income in the event you are unable to work due to sickness or accident enabling you to pay your bills and maintain your current lifestyle.
Income Protection is for both employed and self-employed people. The cover can be aligned to kick in when your work place sick pay ends.The defer period can be as little as 2 weeks for those whose employers offer no sick pay. This defer period may also be appealing to the self-employed. We have a range of companies offering “accident cover” from day 1 which may be beneficial to those employed in riskier positions.
Most providers allow protection of your income up to 60%, with a small number allowing 70% (at a cost). For the self-employed, providers will average your latest 2 year’s personal income.
Cover can be arranged to pay out on claims for 1 year, 2 years, 5 years or until the age of 65. Some providers are willing to go past the age of 65, however this comes at a cost.
This cover can give you the peace of mind that you would not suffer financially if you were unable to work and that you would not have to rely on state benefits or your partner to ensure you remain financially sound.
Private Medical Insurance
Private Medical Insurance pays out for private treatment if you fall ill, be it for treatment of acute or essential medical conditions, as well as surgery, medical tests and ongoing care. Cover available will vary between providers but in the main includes in-patient care, including tests and surgery, out-patient treatment cover with different capped levels, hospital accommodation and nursing care, exclusive drugs unavailable on the NHS, psychiatric treatment and other complementary therapies such as physiotherapy
Babysteps Financial works in association with WPA who offer a fantastic private medical package. Whereby you can be covered for high costs of fast-tracks consultations, testing and diagnosis and private treatment for short-term medical issues.
Private Medical Insurance gives you the peace of mind that should you or your family fall ill or have a medical concern, the high costs of fast-track consultations, testing and diagnosis and private treatment can be covered.
Providers’ cover varies but can include:
- Testing and Fast-tracked Diagnosis
- Surgery and In-patient care
- Out-patient treatment
- Exclusive drugs unavailable on the NHS
- Complementary Therapies
* Please note that terms and conditions apply to all of the above