If something were to happen to you, the last thing you want is to be worrying about money.
Financial planning is not just about getting what we want from life. It is also about protecting our loved ones. We do not like to think about illness and death but ignoring them can have severe consequences.
Here are some of the policies we may consider which could shelter your finances from stormy weather.
Life assurance
Anybody with a family and a mortgage should look at taking out life insurance. As a minimum, this should cover any debts and ensure the family can keep their home. It could also provide extra money to help cushion the shock to a family’s finances at a difficult time.
The cover should match your specific circumstances, meaning it is critical to choose the right level of cover and the right term for the policy. By putting the benefits into a suitable trust, you can ensure they go to who you want them to at the right time. These plans typically have no cash-in value at any time, and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Income protection
Not being able to work can quickly turn your world upside down. These policies typically pay between 50% and 60% of your salary, free of tax, if you are unable to work due to illness or injury. They are a necessary form of cover for those with dependents. The terms and conditions can vary – some pay until retirement or death, others until you return to work. Most only pay out once a pre-agreed period has passed, ranging from three months to a year.
Some policies will also only pay if you cannot return to your own occupation. Others only payout if you cannot do any job. Getting professional financial advice is vital to make sure you have the right policy in place for your needs. These plans typically have no cash-in value at any time, and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Critical illness
This cover gives you the comfort that, should you suffer a specified critical illness, you will get a tax free lump sum. Critical conditions include a heart attack, stroke, and certain types of cancer. Each policy will have a definitive list. Getting professional financial advice is vital to get the right cover.
Typically, people use the proceeds to fund paying off a mortgage and any other debts, paying school fees, or leaving a financial legacy. These plans typically have no cash-in value at any time, and cover will cease at the end of the term. If premiums stop, then cover will lapse.
