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Protection

Insurance Advice in Morpeth and Northumberland

The reality is that no one really wants to fork out for protection it’s simply something that we need to have.

We insure our cars, pets, houses, phones, boilers & jewellery all the things that are most valuable to us, so obviously we insure the futures of the people we love?

 

Do you know what life insurance you have, can you explain who is covered, what for and how much?

In our experience we have found most people understand very little about the insurance they have. More often than not we come across sad situations whereby the proceeds of an insurance policy get paid into the deceased’s estate rather than directly to the intended beneficiaries (loved ones). This means that the monies are delayed in payment until a grant of probate has been issued often resulting in a delay of months if not years. We will endeavour to ensure that your loves ones get paid out immediately the full amount you are insured for and within just days, helping to alleviating one of the most stressful and distressing parts of your journey .

There are various types of protection plans to choose from. So to help we have summarised some of the most common forms. Deciding which is best for you and how much, how long and for who may look like a simple process. However due to the different types of insurance and your own individual unique circumstances it can be a complex area.  Ensuring you and your family are properly protects goes much further than just paying a monthly premium. At Lifelong we will guide you through trusts and guardianship to ensure the ones you love and want to protect are the ones who will benefit.

Unfortunately from experience we have found that clients often confuse critical illness with terminal illness.  Term assurance plans often automatically includes terminal illness benefits, this provides cover if the insured is diagnosed with an illness with less than 12 months to live. If it has been mistaken for critical illness cover (see explanation below) this can sometimes mean clients are underinsured or leave them in a very difficult situation if they do not review their plans – Lifelong can offer a simple solution – we have a review service that can means we can explain to you what you have, what your covered for, who it pays too and if you are over or under insured.

During my 30 years in the industry I have assisted dozens of my clients making life or critical illness claims. While it’s a very upsetting and distressing time for all involved, the payout do go some way to making life more bearable for either those left behind or those who now have to deal with an illness which means a whole new way of life. Without the benefit from these plans my clients could not have remained in their homes, maintained their standard of living, made changes to their homes to accommodate their needs as a result of illness or been able to pay for the extra help needed whilst in recovery.

Level Term Assurance

This is a plan which is for a fixed term and will pay out a fixed amount should the insured person die within the term of the plan, Premiums can either be guaranteed or reviewable and at the end of the plan it simply ends, there is no investment content.

Decreasing Term Assurance

Like Level Term Assurance this type of plan is for a fixed term. A fixed amount is agreed at the outset and over the course of the term that amount decreases in line with an agreed percentage. This type of plan would generally run alongside a repayment mortgage. At the end of term the policy ends, there is no investment content.

Family Income Benefit

This is a very cost effective way of providing for your family in event of death, this type of plan would provide a fixed income for a fixed number of years in event of a claim. Many people don’t believe they can afford sufficient life insurance to protect their families properly, in our experience this type of plan can give you a great cost effective solution.

Critical Illness Cover

Much like Level Term Assurance, the term and amount is fixed at the outset and remains the same until either a claim or the end of the plan. With Critical Illness cover you would have to suffer from one of the agreed and underwritten illness stated in the terms of your plan in order for it to pay out. It doesn’t cover you in event of death and there is no investment content. There is usually a short period of time which you would have to live from date of diagnosis before the plan will pay out. This can also be linked to the life insurance mentioned above.

It is so important that these plans are reviewed due to the fact that many providers have major differences in the type and amount of critical illnesses covered. This is one product that should never be based on cost and cost alone. Some providers only offer to cover up to 7 ABI critical illnesses while others can offer up to 47 ABI+ critical illnesses. Can you imagine taking out critical illness cover, paying for it, being diagnosed with an illness, and then discovering legitamely that you are not covered for the illness you have been diagnosed with?

Income Protection

This will provide an individual with a replacement income should they become sick and unable to work. The plan will be agreed up to a maximum of 60% of earnings and usually until the individuals retirement date. The policy provides a monthly income after a deferred period and will pay out until the end of the plan – usually retirement age or if the individual dies – whichever comes sooner. Income Protection does not have any investment content and minimum deferred periods vary from provider to provider. More and more people are becoming self employed and moving away from major companies with benefits so it’s really important to protect your income. Many employers offer short term sickness benefits paid up to perhaps a year after which benefits generally cease. If you have been off sick for a year what is the likelihood of you being well enough to work at the end of that year? The state isn’t reliable and even in event of a successful claim it is unlikely to support your current lifestyle.

Whole of Life

This plan does as the name suggests – it covers the insured for the whole of their life provided premiums are maintained. The plan usually comprises of two elements a term assurance and investment. The idea being that the term assurance provides you with cover while the investment element builds up, over time the term assurance reduces and the investment element grows. These plans can be guaranteed or reviewable, guaranteed is generally the cheaper option over the long term.  Whole of Life plans are often used for inheritance tax planning.

Trusts

Trusts are used to ensure that specific assets or benefits can be paid to the people you want to receive them. For example if you have a life insurance policy and you want the proceeds to be paid to your children (beneficiaries) on death, unless you have the plan in trust this money will form part of your estate, it could be liable to inheritance tax and the final figure could be taxed at 40% and even if it’s not it will be a lengthy process before your children see a penny. If the policy is in trust on your death the sum assured is passed straight to your beneficiaries and protected from tax.

Trusts can be used in a variety of ways and can include other assets so it’s important that you discuss this with a professional adviser.