Protecting your Financial Future
Some things are too important to be left to chance. These days, whether you are single, married, bringing up children or looking forward to retirement, you are bound to have financial responsibilities.
It is important to ensure your financial future and your family are both taken care of in the event of your death, critical illness or accident.
Term Life Cover - This is one of the cheapest forms of life cover and is designed to pay out a lump sum upon death during a term e.g. up to your 60th birthday.
Life Cover for your Whole of Life - A comprehensive plan which will provide a tax free cash sum on your death throughout the whole of your life.
Income Protection - Provides you with a replacement income to help maintain your standard of living should you be unable to work due to illness or injury. This is an extremely important benefit as it could provide a replacement income for the rest of your working life should you suffer an accident or illness that stops you carrying out your occupation.
Critical Illness - Provides a cash lump sum benefit to help relieve financial pressures following a critical illness.
Mortgage Protection - Valuable Life and Critical Illness cover designed to pay off your repayment or interest only mortgage during its term.
If you were off work for two weeks or so, how would your income be affected? If you are employed, your employer would probably continue to pay all or at least most of your salary. It is a rather different situation if you are self-employed. Although the slow process of invoice payment could mean that you would suffer no immediate loss of cashflow, the chances are that there could be an income hiccup down the line.
Ask yourself what would happen to your income if you were unable to work because of accident or illness for two years. The picture would be drastically different. Your employer's sick pay might well stop after six months or a year, leaving you to rely on long-term Incapacity Benefit from the State. If you are self employed, two years of incapacity might mean you will have no business left and you would also rely on long-term Incapacity Benefit (currently a basic - and - taxable - £67.50 per week).
In either case, there is a danger that you might not qualify for any benefit from the state, even though you cannot undertake your normal work. Long-term Incapacity Benefit is subject to a "Work Test" which as a starting point has an assessment of what you can do, not what your illness prevents you from doing. If this shows that you are capable of working - however menial the task - then you will receive no benefit. This tough line has been reaffirmed in the Government's proposals for changing Incapacity Benefit contained in the Welfare Reform and Pension Bill. This extends the principle of self-support by giving the Department for Work & Pensions the power to reduce a claimant's Incapacity Benefit if they are or could be drawing a pension.
So if you think all this could not happen to you, think again. The chances of being off work for a long period are probably greater than you may think. According to the DWP statistics, more than half a million people had been off work for over five years. At any one time, 1.8 million people of working age are away from work for at least six months because of illness or disability.
If your - and your family's - income is not adequately protected, then now is the time to take cover. Income Protection can be tailored to suit your needs. For example, if your employer provides you with a 12 month earning guarantee, your income protection can start payments after a year's absence from work.
Homemaker Footnote Income protection is not only important for earners: if you or your partner is the homemaker and becomes unable to carry out (unpaid) domestic work, the whole family could suffer. Some of the more enlightened insurance companies now offer income protection cover for homemakers, so that the costs of outside help can be met if illness strikes.
You might be able to save significant amounts on the cost of your Life Assurance and Protection cover.
One recent estimate is that premiums have now fallen to their lowest level for 14 years.
If you have arranged any term cover in recent years, perhaps to protect your family or to cover a mortgage or other loan, you may now be paying too much.
If you arranged mortgage or loan cover with your lender, it is all the more important that you review the cost of your cover. Most lenders are tied to one insurance company (often part of their group) and few offer competitive rates to their largely captive market.
And if you are one of the 39% of people who, according to a recent poll, have no life cover for their mortgage, now is obviously a good time to correct your omission.
For more information on this subject. Please visit the Money Group at http://www.moneygroup.co.uk/contact_us.html
