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PROTECTION
Insurance products can vary widely and in important areas and sometimes people find that their insurance does not cover things they assumed it did. There is no point in paying for the wrong or innappropriate cover. Through our experience of dealing with insurers on a regular basis we understand the complexities of getting the right cover and the many factors to take into consideration.
Provide financial support to your dependants if you die.
LIFE INSURANCE
Life cover is important if you have any dependants who would face financial difficulty in the event of your death. Common reasons for this include paying off the mortgage and other debts, replacing your income in the event of death, or even covering school fees and other significant expenses in the event of your death.
Get a lump sum payment in the event of a serious illness.
Critical Illness COVER
Critical illness cover will pay out a lump sum in the event that you suffer from a serious illness, such as certain cancers or a severe heart attack, for example. Critical illness is one of those things that we tend to think of as happening to other people.
If you became critically ill and unable to work for a long time, could you manage financially?
Receive the treatment you need without the long wait.
PRIVATE MEDICAL INSURANCE
Private medical insurance (PMI) – also known as private healthcare or private health cover – gives you the reassurance of knowing that you and your family can receive medical treatment privately, without waiting for the NHS to treat you.
Protect your mortgage payments against ill health or redundancy.
Mortgage Payment Protection
Your mortgage could well be your largest single expense and your home is pretty certain to be something that you don’t want to lose so it makes sense to protect it. Mortgage Payment Protection Insurance (MPPI) is available to cover the cost of your mortgage payments in the event that an accident, sickness or unemployment stops you from working. This insurance is a form of Accident, Sickness and Unemployment (ASU) cover. If you are concerned about whether or not you could cope financially in the event that you lost your job through redundancy or ill health then talk to us.
Protect your business against the loss of key individuals.
Key person insurance
Key person insurance (traditionally called keyman insurance) is designed to compensate your business for any financial losses that would arise from the death or incapacity of a key person or people. This is particularly relevant to more senior staff and small firms.
Free protection
consultation
Speak to an adviser who will assess your objectives, current position, and help you plan a course of action. It’s also an opportunity for you to get to know us before deciding to engage our services. You can ask as many questions as you need. Your first meeting with us where we will discuss the ways in which we might help you is free of charge. Contact us today to book an appointment.
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Life insurance
Life cover is important if you have any dependants who would face financial difficulty in the event of your death. Common reasons for this include paying off the mortgage and other debts, replacing your income in the event of death, or even covering school fees and other significant expenses in the event of your death.
Life insurance comes in a couple of different varieties: it can cover you for a fixed period of time or it can cover you for the whole of your life.
The first option, Term Assurance, is often taken out by those who have a mortgage and dependants so that, if they were to die before the end of the mortgage term, the dependants would not be at risk of becoming homeless since the insurance pays off the mortgage. Term assurance policies only pay out if you die within the term you have chosen to be covered for. Those with interest only mortgages might select level term assurance but if you have a repayment mortgage, and consequently a reducing debt each year, reducing term insurance can be a cheaper option. Of course you don’t have to restrict it to the mortgage debt either – you can go the other way and put in place sufficient cover to pay for whatever expenses you think your dependants would need covered in the event of your death, such as school or university fees. Obviously the more generous the cover, the greater the cost.
The plan will have no cash in value at any time and will cease at the end of the term.
If premiums are not maintained, then cover will lapse.
The second type, Whole of Life policies, remain in force until the end of your life and, unlike Term Assurance, are therefore guaranteed to pay out at some point. Of course there are exclusions such as suicide but the principle is that the money will be paid out to your dependants at some point.
You may also elect to have the policy pay out on diagnosis of a terminal illness.
If you are an employee you may well find that you have some life cover in the form of a Death in Service benefit, which is usually a multiple of your salary. We can check this out with you and see if it is sufficient or at least take it into consideration when calculating your requirement for any additional cover. It is equally important that, should you change jobs, you check that the level of cover you have is still appropriate.
If you have business partners it may be useful to take cover out on all of you. Should any of you die it is important that the survivors can pay the estate the value of their share of the business.
Life insurance can also form a part of your estate planning.
If you do not have any financial dependants, life insurance is probably not essential to you.
Critical Illness Cover
Critical illness cover will pay out a lump sum in the event that you suffer from a serious illness, such as certain cancers or a severe heart attack, for example. Critical illness is one of those things that we tend to think of as happening to other people. According to insurer Legal and General the average age of a critical illness claimant is just 47 and the most common reason for a claim is cancer (Legal and General 2017 claim stats). If you became critically ill and unable to work for a long time, could you manage financially?
Critical illness insurance or critical illness cover is insurance against being diagnosed with a critical illness, where the insurer will normally make a lump sum cash payment although it can be structured to provide a regular income instead. The purpose of the insurance is to guard against the possibility that you cannot work for an extended period of time, perhaps the rest of your life.
Critical illness is not the same as life assurance. Whilst you can obtain the two in the same policy, the critical illness policy is specifically for those who carry on living after their diagnosis or surgical procedure. For example, if you were to undergo a procedure and not survive you would generally not expect critical illness to pay out – instead, your life insurance would be used. Clearly then, critical illness is insurance that can be used in conjunction with life cover. If you already have some form of life cover then it might be wise to take the cheaper option of critical illness cover only.
If you were unable to work, critical illness cover could provide the money required to maintain your mortgage payments, support your financial dependants, pay for changes required in your life as a result of illness and many more things that can result from critical illness.
Different policies will protect you against different conditions, the most common being some forms of cancer, heart attacks, strokes, and multiple sclerosis. There are many other conditions and many different standards of cover available. It is vital to understand the cover you are applying for.
According to Aviva Individual Protection Claims Report (Spring 2017) a third (33%) of people said they had not always being entirely frank with insurers when applying for different types of insurance. More than half of UK adults (53%) also say they do not bother to read the detail on any insurance policies they purchase. A similar proportion (54%) also said they only check their insurance policies’ terms and conditions when they need to claim, increasing the possibility of disappointment if a claim is made for something that is not covered by their particular policy, such as a specific illness.
The underwriting process for critical illness takes into account a range of factors thought to affect risk of certain conditions such as age, gender, smoking, medical history, family history, alcohol consumption, and body mass index. Different insurers will often look upon these things differently so, for example, if there is a family history of certain conditions, we will know which insurers fully understand that type of case and treat it fairly. These risk factors can result in the insurer applying a loading to the premiums or even exclusions for specific illnesses.
If you have a family history of illness (breast cancer, for example), or any current health issues or risk factors such as obesity, there is even more reason to consult with us on critical illness cover.
The plan will have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
The plan may not cover all the definitions of a critical illness. For definitions please refer to the key features and policy document.
Income Protection
Income protection will pay you a monthly sum in the event that you cannot work due to illness or accident until you recover or retire.
According to insurer Aviva, the average age at first claim was just 42 with the most common reasons for a claim being musculoskeletal conditions, mental health, and cancer. (Aviva, 2021 ).
Income Protection Insurance supports you financially if you can’t work due to illness or accidental injury. Income protection does not guard against redundancy or unemployment – if that is your concern then you need to look instead at Accident, Sickness and Unemployment cover. Income protection is available for employed and self-employed people.
Income protection is truly a long term solution to protecting your family against a loss or drop in income. If you cannot return to work the policy can continue to pay you until your planned retirement date (selected when you first take out the policy) but it can also assist you if you are able to return to work part time or in a reduced capacity.
Multiple short term illnesses can also be covered so long as the policy is in place although the benefit starts after an agreed period of time, called a deferred period whose duration you select at the outcome. Obviously the shorter the deferred period you select, the higher your premiums. Taking into account sick pay from your employer and any rainy day savings you have in place, you could increase your deferred period to reduce your premiums.
According to insurer Aviva, the top three reasons for income protection claims are musculoskeletal conditions – 29.5%, mental health conditions – 23.8%, cancer – 8.7% (Aviva Individual Protection Claims Report, 2021). According to the same report the average length of claim per policy is 6 years and 11 months. The average age at first claim was 42 years.
As with critical illness cover, insurers do sometimes make exclusions to your policy, so some conditions may not be covered. This is something that we would discuss with you to reach the best solution.
Where insurance is concerned, it is unwise to shop around based entirely on price. We will make sure that you have the most appropriate cover for your situation, at the best price available, from an insurer we expect to provide a good service if the time comes when you need to make a claim.
Income protection (with no investment link) has no cash in value at any time and will cease at the end of the term. If you stop paying your premiums your cover may end.
Private Medical Insurance
Private medical insurance (PMI) – also known as private healthcare or private health cover – gives you the reassurance of knowing that you and your family can receive medical treatment privately, without waiting for the NHS to treat you.
There have always been financial pressures on the NHS but never more so than now. Add to that an increasingly elderly population and it’s hard to imagine maintaining even the current level of service. This is not a criticism of the NHS which has done such a fine job for so many years but an acknowledgement of changing times.
Private medical insurance (PMI) – also known as private healthcare or private health cover – gives you the reassurance of knowing that you and your family can receive medical treatment privately, without waiting for the NHS to treat you.
For many it is also a question of the quality and dignity of the experience – often private healthcare can provide comfortable private en-suite rooms with TV, telephone and radio.
Generally speaking you can only insure against things that have not happened yet so pre-existing conditions are not usually covered. Sometimes you can obtain cover for them after a period of being insured without a recurrence or treatment for the previously existing condition.
As always there are ways to keep costs down – increasing the excess is one way to do this and still maintain a comprehensive cover. Some plans only cover hospital admission costs and not out-patient costs but this can be a false economy.
If you are an employer, or have some influence in the human resources department, you might like to consider PMI as an employee benefit and having it available to other people in the firm.
Mortgage Payment Protection Insurance
Your mortgage could well be your largest single expense and your home is pretty certain to be something that you don’t want to lose so it makes sense to protect it. Mortgage Payment Protection Insurance (MPPI) is available to cover the cost of your mortgage payments in the event that an accident, sickness or unemployment stops you from working. This insurance is a form of Accident, Sickness and Unemployment (ASU) cover.
If you are concerned about whether or not you could cope financially in the event that you lost your job through redundancy or ill health then talk to us.
Accident, Sickness and Unemployment
Accident, Sickness and Unemployment (ASU) guards against a temporary loss of income. They are often used to avoid missing payments on a mortgage.
Unlike insurance such as Income Protection or Critical Illness, these policies are not designed to give you long term protection. Rather they are designed to plug gaps. There is generally a maximum period over which they will pay out and the longer the period the more expensive the cover is likely to be. You can choose the level of cover you want and this affects the policy price accordingly. Of course, if you are fortunate enough to have large reserves of cash on hand you may not require this cover at all.
Mortgage Payment Protection Insurance (MPPI) policies, a form of ASU, usually start paying out from day 31 or 60 days after you become unable to work rather than from day one but some are what is known as ‘back to day one’ so this is merely a delay rather than a gap in protection.
It is always wise to have some money set aside to cover such gaps and ensure that bills are paid while you await your ASU payments. Further, for unemployment claims, many policies will not pay out if you claim within the first 3 to 6 months.
You can usually cover more than your mortgage payment – often an additional 25% – so that various bills are also protected but the amount you receive is also generally capped at a percentage of your income. Those with large mortgages should consider keeping a bit more cash in reserve just in case.
It is also worth investigating what you might get from your employer as this could mean the cover is not required or, in some instances, that it is affected by the benefits you receive.
Key person insurance and business protection
Key person insurance (traditionally called keyman insurance) is designed to compensate your business for any financial losses that would arise from the death or incapacity of a key person or people. This is particularly relevant to more senior staff and small firms.
It is surprising how many businesses are not insuring their most important assets – the people in them. Businesses are more inclined to insure material goods like photocopiers or buildings than they are their own staff.
This is particularly relevant to small businesses since a smaller workforce will be harder hit by the loss of a single key member of staff. Key person insurance can protect against a range of risks including:
- Recruitment costs to find a suitable replacement
- Loss of profits whilst the business is disrupted
- Paying penalties for non or late delivery on goods and services
- Paying any company sick pay to the key person if the claim is related to a critical illness
Entrepreneurs and business directors sometimes take on a great deal of unnecessary personal financial risk to keep their business trading. If you are putting personal assets at risk then it is vital that you understand how business protection insurance can prevent a damaging impact on your business, and potentially a knock on affect on your family and personal life.
