Financial policies are sometimes at their most valuable when protecting families, incomes or homes from unforeseen circumstances. Insuring ourselves against an undesirable event like unemployment, sickness or serious illness or even death is never a pleasant area to dwell upon. However, it is imperative as part of a financial plan to know you are protected to at least give an element of financial security at what would undoubtedly be a difficult and emotional time.

There are several ways in which to protect yourself and your family in the event of an untimely death. Most people take out life insurance to provide for their families and alleviate any financial worries at a difficult time.

Level Term Assurance pays a lump sum in the event of death during the term of the policy. Decreasing Term Assurance works similar to Level Term Assurance, but the benefit is set at outset and gradually decreases over the term of the policy. These policies can be used as cover for a repayment mortgage, or other loan where the amount of capital outstanding also decreases over time. Family Income Benefit works the same as term assurance but instead of paying a lump sum upon death, it will pay a regular monthly tax free income in the event of death to your dependants up until the end of the term of the policy.

Whole of Life Assurance can be provided for both life and critical illness benefits. This type of policy will remain in force until the death of the policy holder or the earlier cancellation of the plan should it be no longer needed. This type of contract is very useful for inheritance tax planning and some types of business assurance.

Critical Illness is usually available as an addition to all term assurance plans but can be bought on a stand alone basis. Critical illness generally allows for the lump sum benefit to be paid in the event of diagnosis of certain critical illnesses, such as Heart Attack, Stroke, Transplant, Blindness, Total & Permanent Disability and so on. Most providers conform to the Association of British Insurers standards for qualifying illnesses and it is important that you fully understand the terms of each illness.

This policy is designed to provide a tax free income in the event the insured individual is unable to work due to ill health. The level of premium will depend upon benefit and term selected and most policies cease to pay the benefit once the insured is able to return to work. Income Protection policies are usually written to age 65.

ASU policies were traditionally sold to accompany mortgages, allowing for a regular income to be paid to the insured should they be unable to work (or lose their job). The product can be split down, and unemployment cover is usually the optional extra available for an additional premium. It is important to compare ASU and Income Protection closely as one may be more suitable than another.

 

Morris Brown

Mulberry Wealth Management Ltd now incorporates the long established Cardiff based Financial Advisers Morris Brown Ltd.