Having A Financial Plan For The Future Is A Key To Stability
By choosing to plan for the future financial stability for your family and loved ones is an extremely important choice to make. But what would happen to that plan and your family if you became seriously ill. Or even in the worst case, if you passed away? That sudden loss of income could cause a dramatic change to your families financial stability and the careful planning for the future will have failed.
A significant part of creating a financial plan for the future should include protecting yourself against the financial costs of illness, injury and passing away. A key point to remember is depending on your personal circ*mstances. You could be single, in a relationship, married or in a civil partnership. There will be at least one person who depends on you physically, emotionally or financially which makes you a major cornerstone of securing their financial future. If you do not have any protection policies currently. Or its on the to do list, an insurance policy could be just what you need to safeguard you and your loved ones for the future.
What Do I Need To Protect?
As detailed within many of our guides at Life Insurance Cover we have explored the importance of buying and reviewing Life Insurance and Critical Illness. A number of factors should be considered when choosing what you need to protect including your job, health, family arrangements and current and likely future financial situations.
The most common financial risks include:
Young children: Because children remain reliant on parents physically and financially it is important to ensure that their future is protected. By including them in your financial protection, will provide peace of mind for the future.
Partner, spouse or other relation: Many families are reliant on either a sole income provider or a higher earner. Part of either buying a new Insurance policy or reviewing your Current Life Insurance should include a safety net for their income.
Family home: Usually one of the largest financial investments for many families of all sizes for the future of their loved ones. Many people choose to review Life Insurance protection policies when they buy a new home or when they renew a mortgage. By reviewing Mortgage Life Insurance when you change a mortgage deal is a good practice to ensure that your home is protected for the future.
This list is only an illustration of the most common reasons for Life Insurance or Critical Illness Cover and not exhaustive. This is because each persons individual circ*mstances will be completely different including current age and different family dynamics.
By using an FCA regulated broker like Life Insurance Cover to review your protection policies every few years. Can ensure that you remain protected for the any future financial changes. Including the arrival of a new family member or buying a new family home.
How Long Do I Need Life Insurance Or Critical Illness For?
The simple answer is, for as long as you need it to protect your loved ones from financial risk. Many policyholders choose to match their policies to set dates in the future. For example if you have a young family at home, it could be matched to their 18th or 21st birthday. Alternatively a Mortgage Life Insurance policy could be set to expire after the final payment on your family home.
Because family circ*mstances evolve over time it is important review any protection policies you have in place. It could be a new job with a higher salary, a bigger family home or a relationship change. Reviewing your current protection policies every few years, will ensure that your financial plan will provide stability for the future.
By using an FCA regulated broker, like Life Insurance Cover. Who can search and compare all of the UK Life Insurance providers. Will help you to keep your financial future protected.
What Are The Different Types Of Protection Available?
Many financial products have different ways to protect you from the financial risk. The most common type that people are aware of is Car Insurance or Home Insurance. Although these policies do provide protection from risk, they are restricted to annual renewal and will not provide long term protection. However, other different types of policies can provide long term financial security for you and your family including:
Life Insurance
A Life Insurance policy can either pay out a lump sum, or a monthly income in the event of your death. Each Life Insurance policy is created to match each persons individual circ*mstances. This type of policy can be used to provide money for loved ones or pay off existing debts, depending on your policy.
The different types of Life Insurance include:
Level Term Life Insurance: This policy type is term based and will expire at an agreed time in the future. A Level Term Life Insurance policy will make a fixed payment to family and loved ones and will not reduce or increase. This type of policy is usually used for an interest only mortgage.
Decreasing Term Life Insurance: Usually purchased to protect a standard mortgage which reduces over time. This policy type is term based and will expire within an agreed timescale. A Decreasing Term Life Insurance policy will make a reducing pay-out to families and loved ones as the level of protection reduces over the policy term.
Increasing Term Life Insurance: This policy type will increase in monthly premium cost and level of protection cover. Making this Term Based policy expensive prior to protective cover lapsing.
Whole Of Life Insurance: This policy type is also known as over 50s or non medical Life Insurance. A Whole Of Life policy does not need medical information and is not limited to a fixed period of time. Many people choose this option if they have a medical condition or wish to protect against funeral costs.
Critical Illness Cover
A Critical illness Cover policy works in a very different way to Life Insurance and can provide you with a lump sum pay out. Should you suffer from a serious illness or condition including many different types of cancer. The key difference between a Critical Illness Cover policy and Life Insurance is that it will pay the policyholder instead of the family.
A Critical Illness Cover policy can help to make changes to a family home for the benefit of the policyholder. Or be used to obtain additional care that might be required. The types of illnesses covered vary depending on the insurer and there may be other caveats about the acuteness of your illness.
By reviewing your protection policies through an FCA regulated broker, like Life Insurance Cover. Can help you to identify if you need Critical Illness Cover, or even increase or decrease your cover to best match your circ*mstances.
When Did I Last Review My Life Insurance?
Many people with either Life Insurance or Critical Illness Cover have not reviewed their protection policies since they purchased them. This could mean that the level of protection that they have for their financial plan could be costing to much. Or no longer be fit for the purpose it was intended for, or potentially lapsed because it was a Term Based policy.
Has your situation has changed? for example have you moved house and taken on a bigger mortgage. Has your family increased or if your income has changed. It’s probably worthwhile taking another look at the protection policies you have and whether they’re still right for you. But remember, don’t cancel any existing policies until you’ve taken advice and have new cover in place.
If you need to review all of your current protection policies. It is advisable to search and compare all of the different available options. Or by using an FCA regulated broker, like Life Insurance Cover you can be reassured that a simple policy review can usually work out much cheaper and offer peace of mind for the future.
Having The Right Amount Of Cover
It’s surprisingly easy to under or overestimate the amount of protection cover you need. For Life Insurance and Critical Illness protection, consider what kind of lump sum you’d need to cover any outstanding mortgage and other debts. When protecting against the effects on your family, you might also want to think about providing for the future costs.
Knowing The Financial Cost
Premiums are a major factor in how you choose your policy. Remember not to take prices at face value and be aware that not all premiums are fixed. Reviewable premiums which are likely to rise over the term are a good example of this. Our specialist advisors at Life Insurance Cover will explain all of the potential costs.
It is also essential that you read the small print to ensure that the policy will cover your needs. Buying unnecessary insurance is not only a waste of money. But can give you a nasty surprise should you need to make a claim.
