Life Assurance

What happens if a breadwinner dies? Most people think that the life assurance benefits often provided by employers will be sufficient. This may not be the case. There are two main types of term life assurance: those that pay out a lump sum on death, and those that pay out a monthly income to the family left behind. In general, we recommend that all debt should be covered by lump sum assurance and all other monthly expenses for the family should be met by monthly income assurance. This is usually the most cost-effective way, and term life assurance is normally remarkably inexpensive. For those with no debts and no dependants it may not be necessary at all.

Lump sum life policies should usually be written in trust to ensure speedy payout and possibly to mitigate inheritance tax. For this reason we regard non-advised life policies purchased in the local supermarket or in a high-pressure bank sales environment with a jaundiced eye, without even considering the issue of good value for money. As ever with financial planning, we believe advice is vital to securing the best outcome.

Income Protection

What if a breadwinner has a bad accident or contracts an illness that incapacitates them? All financial and retirement plans go out of the window. It may no longer be possible to pay monthly bills or save for a decent retirement. No-one wants to rely on paltry state benefits: most working people should have income protection. If you are unable to work due to sickness or accident, this pays out a replacement income tax-free until you are well enough to go back to work, or you die, or the term of the policy is reached. Unlike unemployment insurance, this is a policy that can continue paying out for years if necessary, making it one of the most valuable forms of protection.

Critical Illness Cover

This insurance pays out a lump sum upon diagnosis of one of a prescribed list of dread diseases to a specified severity, including cancer, heart attack or stroke and degenerative diseases such as Alzheimer’s disease or Multiple Sclerosis. This can be enormously useful in a number of ways:

• It can buy expensive drugs not available on the NHS, increasing your survival chances.
• It can pay for private nursing or modifications to the home that may be required.
• It can ensure that sufferers from dread diseases at least don’t have finances to worry about, allowing them to concentrate on getting better

The Abbott Clarke Partnership can guide you through the protection options and ensure that you have adequate protection, correctly set up and at the lowest cost.