It has been an unusual year for everyone, and with health concerns heightened by the outbreak of the coronavirus pandemic, mortality is perhaps more on our minds than usual. But you don’t have to be passive – you can take steps to make sure your family is looked after.
Many of us are thinking more about protecting our families from financial difficulties should the worst happen, whether that’s by using up savings, cashing in investments or taking out cover to provide for the long term.
At Bulley Davey Wealth Management, we consider what you need to know about the different types of financial protection policies, and which options suit you and your family’s needs.
Life insurance vs. life assurance
Most of us do not think twice about insuring our phones, cars and homes, but according to the Association of British Insurers around one in four ‘main household earners’ have a life insurance policy.
Life insurance policies usually cover a set period of time and can come in handy if your loved ones rely on you to pay the bills. Premiums are based on things like your age, weight, if you smoke and your medical history.
The same factors are considered when calculating life assurance premiums, although the key difference with these policies is that they usually cover the whole of your life. Your provider will calculate your monthly premium according to how high you want your payout to be.
This usually comes at a higher cost than the premiums for life insurance policies, but gives you the benefit of a guaranteed payout, and peace of mind throughout your life.
Speak to one of our independent advisers to determine which product might be more suitable for you and your specific needs.
How does life assurance work?
At the start of your life assurance policy, you have the option to choose how much you want your eventual tax-free lump sum to be.
In some policies, there’s an investment option where your insurer invests your monthly premiums and your final lump sum amount will be dependent on how well these investments do.
Like all investments, increases in value are never guaranteed and you should seek professional advice before committing to one. However, your premiums will be regularly checked, and may increase as you grow older.
This policy is most commonly referred to as ‘maximum cover’.
Other protection options
Mortgage life insurance
Mortgage life insurance is typically purchased to cover your mortgage repayments, enabling your loved ones to pay your outstanding mortgage in the event of you passing away.
Family income benefit
Family income benefit is a form of decreasing term assurance, meaning the benefit gradually decreases over the policy’s term. This is issued to family members in the form of income payments, rather than a lump sum.
Critical illness cover
Critical illness insurance offers a lump sum in the event of a serious diagnosis of an illness or disability. This can help you to cover your living costs while you’re unable to work, or protect friends and family during difficult times.
Private medical insurance
Private medical insurance is a protection plan designed to cover the cost of private medical procedures and treatments. This eliminates being dependent on national health services, especially at a time like this.
Bulley Davey Wealth Management is your partner in life. Whether insuring your income during periods of illness or uncertainty or protecting your business, we put your needs first.
To discuss your options, give us a call on 01775 718850 or email bdwmadmin@bulleydavey.co.uk