ABOUT PROTECTION
Financial products are sometimes at their most useful when they are protecting our families, our incomes or our property.
Whilst insuring ourselves against an undesirable event such as sickness or even death may not be a pleasant thing to think about, the benefit of being able to set financial issues aside at emotionally difficult times cannot be overlooked.
There are many ways in which a family can protect itself, and because of the large range of products available there is usually an appropriate policy for most circumstances, and most budgets.
There are many different ways to protect your family and your standard of living when you need it most.
LIFE PROTECTION
Most people take out life assurance to provide
for their families and alleviate any financial
worries at a difficult time.
Level Term Assurance
Pays a lump sum in the event of death during
the term of the policy.
Decreasing Term Assurance
Works similarly to Level Term Assurance, but
the benefit is set at outset and gradually
decreases over the term of the policy.
Family Income Benefit
Works the same as term assurance but instead
of paying a lump sum upon death, it will usually
pay a regular monthly/annual tax free income.
Critical Illness Insurance
Is usually available as an addition to all term
assurance plans but can be bought on a stand
alone basis. Critical illness provides a lump
sum benefit / income in the event of diagnosis
of certain critical illnesses.
INCOME PROTECTION
Income Protection
This policy is designed to provide an income in the event the insured individual is unable to work due to ill health. The level of premium will depend upon the amount of benefit and term selected and most policies cease to pay the benefit once the insured is able to return to work. Income Protection policies are usually written to retirement age.
Accident, Sickness & Unemployment (ASU)
ASU policies were traditionally sold to accompany mortgages, allowing for a regular income to be paid to the insured should they be unable to work due to ill health, an accident (or lose their job). The product can be split down, and unemployment cover is usually the optional extra available for an additional premium. Benefits are only usually paid for a specified time for example 12 months. It is important to compare ASU and Income Protection closely as one may be more suitable than another. It may also be possible to use the 2 products to work in tandem with each other.
BUSINESS PROTECTION
Keyperson / Shareholder / Partnership Protection
Businesses may want to protect the key employees within their firm – perhaps the key salesperson, or the IT manager without whom the business will not function properly.
Keyperson / shareholder / partnership protection can provide a fixed sum should the individual be unable to work, or even die. The benefit will be designed to cover the firm’s expenses in meeting any emergency costs, recruiting a replacement employee and protecting the future of the business.
If a shareholder were to pass away, the firm’s remaining shareholders or directors may want to purchase the deceased’s shares from their estate promptly to maintain control of their business. The same scenario also applies to partners in a firm.