Family and Personal Protection
We never think it will happen to us or more likely we don’t really want to dwell on the unpleasant side of life.
However, the impact on people’s lives of accident, illness and death can be devastating. At BLG Wealth we ask our clients to reflect on:
- who will be affected by them being unable to work as a result of illness, accident or death
- how will they be affected
- in an ideal situation what outcome would you like to see happen
- how important is it to plan for this scenario
As a country we will spend more money on buying coffees each month than we do on protecting the futures of ourselves and our dependants.
BLG Wealth work with clients to avoid them saying “if only I had taken action before this happened”.
Don’t’ delay any longer: TAKE ACTION NOW
This policy pays out on death within the term of the policy.
Both the premium payments and the amount of death benefit remain the same throughout the term of the policy.
This type of policy usually includes a terminal insurance option which will pay out the policy benefit in the event of the policyholder dying within 12 months of the diagnosis of the illness.
This policy pays out on death within the term of the policy.
Although the premium payments do not alter, the amount of death benefit decreases throughout the term of the policy. Therefore, the premium is lower than a standard life assurance contract and is commonly used in conjunction with the repayment of a debt where the outstanding capital sum reduces in line with repayments, for example a capital repayment mortgage. However, there is no guarantee that the level of cover will match the outstanding debt upon a claim.
This type of policy usually includes a terminal insurance option which will pay out the policy benefit in the event of the policyholder dying within 12 months of the diagnosis of the illness.
This policy pays out on death within the term of the policy.
In this instance, the amount of death benefit and possibly the premiums will increase over the period of the term. This will offer some protection against inflation eroding the real value of the policy benefits.
This type of policy usually includes a terminal insurance option which will pay out the policy benefit in the event of the policyholder dying within 12 months of the diagnosis of the illness.
This policy pays out on death within the term of the policy.
This policy offers the policyholder the option, at the end of the original term, to extend the policy term without the need for further medical underwriting. However, the premium will increase as it will be based upon your age at the time you take up the option.
The benefit of renewable term assurance is that your new policy premium will be based on your health condition at the time of the original policy commencement even if there has been a significant deterioration in the meantime.
This policy pays out on death within the term of the policy.
This policy offers the policyholder the option, at the end of the original term, to convert to a whole of life policy without any further medical evidence. The level of death benefit cannot be increased and the premium will be based upon your age at the time of taking up the option.
The benefit of convertible term assurance is that your new policy premium will be based on your health condition at the time of your original policy commencement even if there has been a significant deterioration in the meantime.
This policy pays out a regular tax-free income on death within the term of the policy.
In this instance, at policy commencement an agreed level amount of regular payment is set, although some policies do allow for automatic increases over the term to offer some protection against inflation. On the death of the policyholder the tax free payments are paid to the policy beneficiary, normally the remaining partner, monthly, quarterly, half yearly or annually. The term of the policy is often set to expire once the youngest child reaches the age of 18 or 21.
This type of policy usually includes a terminal insurance option which will pay out the policy benefit in the event of the policyholder dying within 12 months of the diagnosis of the illness.
All of the above protection policies could have added a critical illness option. This will pay the policy benefits on diagnosis of a critical illness within the term of the policy. Definitions of qualifying critical illness will vary between Insurance companies, but most usually cover common types of cancer, heart disease, stroke etc.
Due to the wide variety of critical illnesses covered between Insurance companies it is important to seek professional financial advice prior to making a decision.
This policy pays out on death anytime providing all premiums have been paid up to date.
As this policy provides a guarantee of payout on death, a whole of life policy is usually more expensive than a term policy for the equivalent level of benefit. On death of the policyholder, the policy will pay out the sum assured.
The cost of future premiums depends on the underlying investment fund performance and is therefore an important consideration when selecting an insurance provider.
There are different types of whole of life policies:
- non-profit whole life policies – pays a set amount on death subject to the level premiums being paid throughout life
- with profit whole life policies – pays a set amount on death, plus any profits allocated during the policy existence, subject to the level premiums being paid throughout life. They are more expensive than non-profit policies
- unit linked policies – where the premiums and benefits are more directly linked to the performance of the underlying investment funds
it is important to seek professional financial advice prior to making a decision on which whole of life policy is most suitable for your circumstances.
Term assurance policies are cheaper forms of life assurance, with a guaranteed payout on death within the policy term, so this makes them a popular choice for young parents with families.
Whole of life policies will payout on death whenever that either occurs subject to premiums being paid up to date. These are more expensive and are generally used more for tax planning purposes.
Private Medical Insurance (PMI)
Having a private medical insurance policy can offer peace of mind at times when the National Health Service is unable to offer the necessary service your medical condition may require. Premiums are generally calculated on the age of the policyholder, the level of cover required and any pre-existing medical conditions at the time of policy commencement.
This policy pays out a lump sum benefit after a specified period of time, in the event of one or more of the policy medical conditions being diagnosed.
The range of medical conditions covered vary considerably between insurance providers even when it comes to cancer, heart disease and strokes. Therefore, it is important professional advice is sought in order to have these different options explained.
This policy pays out a regular tax-free income if you are unable to work as a result of illness or injury.
Insurance companies do impose a maximum income payout which is normally the after-tax earnings you have lost, less an adjustment for any state benefits you could claim. The income payments will commence dependent upon the deferred period selected at outset, ranging from 0 weeks to 52 weeks, with premiums being lower the longer the deferred period selected.
If employed, this type of protection would normally coincide with the Sick Pay arrangements you would receive from your employer.
The provision of long term care is becoming increasingly expensive and requires long term planning in to avoid possible considerable financial consequences when the need arises.
The sooner the planning starts the less the burden later on in life. Planning can include contributing towards monthly savings plans or single premium investments which will augment whatever State Benefits will be available at the time of need.
As life expectancy continues to rise this is an increasingly important area of financial planning to consider for yourself and your family.
Business Protection Policies
Relevant Life cover is a tax efficient life insurance policy, allowing companies to offer a death-in-service benefit to its employees (including salaried directors). It is set up by the company and pays out a tax-free, lump sum on the death (or diagnosis of a terminal illness) or a specified Critical Illness of the person insured.
This policy pays out to the company, on death or the contracting of a critical illness, of a key employee.
Within many companies there are employees with highly specialist skills, qualifications or knowledge that are highly important to its future profitability or sustainability. By taking out key person insurance on these employees, in the event of their death or contracting of a critical illness, the company can provide for payment towards:
- the costs of a temporary replacement
- the costs of recruiting a permanent replacement
- covering the costs associated with the death or incapacity of a key member of staff
Investors, lenders and even shareholders will expect, certainly with larger companies, that Key Person Insurance is taken out on all staff critical to the company’s future profitability and sustainability.
This policy will pay the policy benefit either on the death or the contracting of a critical illness of a specific shareholder. Benefits being paid to the remaining shareholders.
Shareholder agreements are extremely important in protecting the rights of shareholders, as in most instances they provide the right for remaining shareholders to purchase the shares of a shareholder who has died.
Shareholder protection provides the financial means for shareholders to be able to do this when the time arises thus avoiding the risk of the company falling under the control of someone who knows nothing about or has little interest in the business.
Employers can provide many of the personal insurance benefits listed above on a Group basis for the majority of their employees:
- Life assurance
- Critical Illness
- Permanent Health Insurance
- Private Medical Insurance
There are many benefits to both employer and employee of adopting Group Schemes including discounted premiums, less stringent medical underwriting and the reduction in the amount of corporate tax payable.
Group Employee Benefits are an excellent and affordable way of recruiting and retaining high calibre staff.
This information does not represent financial advice and is not suitable for everyone – therefore if you have any questions as to its suitability for you, you should seek financial advice.
Tax treatment is based on individual circumstances and may be subject to change in the future.
